THU 9 - 7 - 2020
Date: Jun 4, 2019
Source: The Daily Star
Lebanon: What to expect from MPs’ budget review
Benjamin Redd| The Daily Star
BEIRUT: Even though the year is nearly half over, Parliament will not be rushed into rubber-stamping the 2019 budget, the MP heading up its review has told The Daily Star. Ibrahim Kanaan, who chairs the powerful Finance and Budget Committee, said his committee was ready to thoroughly interrogate the draft budget that was endorsed by Cabinet last Monday.

The committee held its first session Monday, and will begin meeting twice daily starting next week, after Eid al-Fitr and the weekend.

In its initial session Monday, the committee got an overview of what’s in the budget from Finance Minister Ali Hasan Khalil, also a fellow MP.

Fifty-three MPs attended the session, according to Kanaan, forcing the group to adjourn to Parliament’s main hall.

Kanaan lauded the interest of MPs, many of whom are new to the budget process after being elected in May 2018.

“It’s very encouraging; this new blood is good for change,” he said.

After the session, Kanaan refused to put a time limit on the budget process, but told reporters, “We hope to finish by mid-July.”

That timeline mirrors one of the actions taken by the committee Monday: voting to extend an exceptional mechanism to fund the government until mid-July.

Used when there is no budget in place, the “provisional 12th” allows the government to be funded at the same level as the previous year. It is meant to be used just for January - the start of the fiscal year - to give lawmakers an extra month to sort out state finances.

But the extended, 254-day Cabinet void sliced a gaping hole in that safety net. As Cabinet finally formed Jan. 31, the president, prime minister and finance minister signed a document extending the provisional 12th. Parliament followed with its own, separate measure, extending use of the mechanism through May 31. Both extensions were unconstitutional, but considered better than nothing.

With the May 31 deadline looming, another executive action extended the provisional 12th until the end of June. But Monday, the Finance and Budget Committee did not adopt that deadline to pass the budget, opting instead to give itself until July 15 to finish the budget. The measure will have no legal force until adopted by the full Parliament.

The month-and-a-half timeline is much longer than the budget process for 2018, but far shorter than 2017. The 2017 budget was the first to be passed since the 2005 budget.

Over a period of just 12 days in March 2018, the Finance and Budget Committee tore through the 2018 budget, often holding two sessions a day and meeting a total of 18 times.

The day after the committee finished, Parliament met. One day later, MPs passed the budget.

At the time, the rush was attributed to the looming CEDRE conference on April 6. France, the host, had made clear that having a state budget would be key.

Kanaan, however, said that CEDRE was not the prime consideration. “We had passed the 2017 budget just a few months prior ... in November 2017,” he said. “It was much the same budget; we had already studied this budget.”

The committee had taken some five months to examine the 2017 budget, although this period included Ramadan, holidays and summer.

Ultimately, the CEDRE conference was successful, netting promises of over $11 billion in soft loans and grants. That money, however, remains locked up pending government reforms - and another budget.

At CEDRE, Lebanon promised to cut its budget deficit by 5 percentage points of gross domestic product over five years. A starting point was not specified, but estimates had put the deficit at around 8 or 9 percent of GDP.

But Lebanon’s deficit for 2018 ended up much higher. While the Finance Ministry has not released figures for 2018, the deficit is estimated to be 11.5 percent of GDP, or approximately $6.5 billion.

The result has been pressure to bring down the deficit much more quickly, with politicians promising austerity and major reforms.

Whether those reforms are present will be a major consideration for MPs.

“It’s not new DNA, it’s the same DNA [as the last budget],” said Nicolas Nahas, a former economy minister and currently the No. 2 on the Finance and Budget Committee.

“I’m putting question marks where they should be,” he added.

“There will definitely be changes.” - Additional reporting by Sahar Houri and Emily Lewis

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