WED 21 - 8 - 2019
May 3, 2019
The Daily Star
Lebanon: Cabinet approves 25 budget articles in ‘very quiet session’
Hussein Dakroub| The Daily Star
BEIRUT: The Cabinet Thursday resumed its discussions on an austerity draft budget, approving 25 articles of the 2019 fiscal plan in “a very quiet session” following a tense meeting the day before, Information Minister Jamal Jarrah said.
Thursday’s session, chaired by Prime Minister Saad Hariri at the Grand Serail, was the third since the Cabinet began a series of meetings devoted to examining the draft budget that seeks to reduce the deficit and generate revenues, a key demand of international donors.
Hariri Thursday reiterated his government’s commitment to carry out a string of key fiscal and economic reforms recommended at last year’s CEDRE conference, deemed essential to unlock over $10 billion in grant and soft loans pledged by international donors to bolster the flagging economy.
“In Lebanon, there are great challenges facing us, but I can tell you that the president of the Republic and I, as well as the speaker of Parliament, have the determination to carry out the necessary reforms despite the difficulties that exist. It is not easy, especially if we want to fight corruption and squander,” Hariri said, speaking at the opening of the Arab Economic Forum held at Beirut’s Four Seasons Hotel.
“Squander is our main problem in the Arab countries. What we are wasting is the time we spend without developing our laws.
“When our electricity bills reach $40 billion, this is squander and corruption also. That is why we are implementing optimistic reform plans,” he added.
Amid Cabinet determination to finish discussing the draft budget and endorsing it quickly before sending it Parliament for final ratification later this month, Hezbollah leader Sayyed Hasan Nasrallah entered the fray.
He called on Lebanese banks to play an “essential role” in rescuing the economy by reducing the interest rate they charge on loans they give to the state. The economy is reeling under a soaring national debt of $85 billion, slow growth and a high budget deficit.
“We are the people of one country and one ship. You, owners of banks in Lebanon, if you do not cooperate in finding a solution [to the crisis], and the financial and economic situation collapses, what will the fate of your banks be? And what will the fate of your investments be?” Nasrallah said in a televised speech commemorating the third anniversary of the death of Hezbollah commander Mustafa Badreddine, who was killed while fighting in Syria in 2016.“Capital will not return [to Lebanon] because the country is heading toward collapse. For the sake of your money and investments, you are concerned with taking the initiative and meeting with the three leaders [President Michel Aoun, Speaker Nabih Berri and Hariri] to tell them that you understand the situation in the country,” he added.
Nasrallah emphasized that Lebanese banks could play “a big and essential role” in helping resolve the deepening economic crisis by reducing the high interest rate they charge the government on Eurobonds and Treasury bills. Addressing his words to banks’ owners, Nasrallah said: “This is the least national and ethical duty.”
Last month, Finance Minister Ali Hasan Khalil said Lebanon was preparing to issue $2.5 billion to $3 billion in Eurobonds on May 20, in the government’s latest pitch to finance the public debt and meet its needs.
Despite repeated calls by some politicians and economists for the Association of Banks in Lebanon to contribute to resolving the economic crisis by giving the government about $8 billion in interest-free loans to help it reduce the deficit, the ABL was reported to have rejected this, saying the government had to first carry out economic reforms before banks could intervene.
Referring to tensions that erupted ahead and during Wednesday’s Cabinet session between Khalil and ministers of the Free Patriotic Movement over the financing of some projects mentioned in the draft budget, Nasrallah urged all the parties represented in the government to keep their rhetoric inside the Cabinet.
“If the media rhetoric and [political] outbidding persist, it will be difficult to reach [agreement] on the budget or on financial and economic reforms and we will instead reach an economic catastrophe,” Nasrallah said. “What is required is austerity and economic reforms.”
Meanwhile, the Cabinet met for the third day in a row to continue discussing the draft budget. The meeting came as a three-day strike called by the General Confederation of Lebanese Workers paralyzed state institutions Thursday. The GCLW had called the strike as a warning against any measure in the budget that might adversely workers’ salaries or retirement benefits.
National institutions, including Electricite du Liban, the National Social Security Fund, the Regie Libanaise des Tabacs et Tombacs, Ogero, the Litani River Authority and various water establishments completely closed down their operations as part of the strike.
“Today is the start of an outcry,” GCLW head Bechara Asmar said after a meeting with Khalil and Labor Minister Camille Abousleiman.
“We are not fans of cutting off streets and striking. Our workers are the ones who are affected by the strikes.”
Speaking to reporters after the Cabinet session, Jarrah said ministers approved 25 articles of the draft budget.
Citing “important progress” in the discussions, he said: “Tax reforms were discussed in depth and we will get an answer from the finance minister tomorrow [Friday] about their impact on the Treasury.”
Most importantly, Jarrah said that the Cabinet agreed to cancel customs and registration tax exemptions for imported cars owned by MPs and ministers. He added that customs exemptions were kept for those with special needs and that Cabinet approved the imposition of fees on car plates with special numbers. Jarrah said the Cabinet would resume budget discussions at 1:30 p.m. Friday.
Asked about Wednesday’s session, which was reportedly stormy following tensions between Khalil and FPM ministers, Jarrah said: “What happened yesterday [Wednesday] was caused by some statements that affected the atmosphere of the meeting and I hope that it ended.
“Today, it was a very quiet session, with a deep discussion and an understanding on all the decisions we took.”
Speaking ahead of Thursday’s session, Khalil said, “Today was a new day and political bickering and disruption on the budget have ended.”
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