ANSD : Cabinet set to endorse 2019 austerity budget

FRI 22 - 11 - 2024

Date: May 27, 2019
Source: The Daily Star

Cabinet set to endorse 2019 austerity budget

_{Hussein Dakroub| The Daily Star}
BEIRUT: Not with standing reservations voiced by Lebanese Forces ministers, the Cabinet is set to meet Monday to endorse a draft austerity budget that cuts public spending and slashes the deficit to 7.5 percent of the GDP from 11.5 percent last year, officials said Sunday.

“The general inclination is for the draft budget to be endorsed during tomorrow’s [Monday’s] Cabinet session. After all, none of the political parties represented in the government had said it would vote against the draft budget,” former Future MP Ammar Houri, a political adviser to Prime Minister Saad Hariri, told The Daily Star.

Asked if the LF ministers’ reservations over some items in the 2019 draft budget could delay its endorsement, Houri said: “It is normal for ministers to have reservations about some budget provisions that will be discussed and after which the draft budget will be approved.”

The next constitutional step after approving it by the Cabinet, Houri said, is to send the draft budget, which includes for the first time a string of austerity measures and key fiscal and economic reforms to cut the deficit, to Parliament for study and final ratification.

President Michel Aoun is set to chair the Cabinet session at Baabda Palace at 11:30 a.m. Monday. Visitors to Baabda Palace quoted Aoun as saying that he was determined to have the Cabinet endorse the draft budget during Monday’s session.

Monday’s meeting will cap 19 sessions that began on April 30 dedicated to examining the draft budget, that seeks to cut state spending and generate revenue in order to slash the deficit.

During Friday’s session, ministers approved all articles and figures of the 2019 budget. Information Minister Jamal Jarrah said that the Cabinet had managed to reduce the deficit to 7.5 percent of the GDP, down from 11.5 percent in 2018.

Ministers have said the proposed austerity measures include tax increases, including an import tax and raising the tax on interest on banking deposits from 7 to 10 percent, and various spending cuts.

Reducing the budget deficit was one of the key pledges the Lebanese government made at the CEDRE donor conference held in Paris last year, in return for more than $11 billion in soft loans and grants from international contributors to bolster the flagging economy.

Minister of State for Administrative Development May Chidiac, one of four LF ministers, said she and her fellow LF ministers voiced “reservations” about items in the budget related to the decline in the revenues of the Telecommunications Ministry, the allocation of LL40 billion (around $26 million) to the Ministry for the Displaced, as well as the projected expenditures and revenues.“The LF ministers put forward ideas to increase state revenues, such as the shutdown of illegal crossings and controlling legal crossings [to ensure customs duties are levied]. But these ideas were not adopted,” Chidiac told The Daily Star.

She said that a proposal for a 50 percent cut in the salaries and remunerations of the president, the prime minister, ministers and current MPs was not included in the draft budget. Instead, the draft budget called for cutting the salaries and remunerations of former MPs, she said, adding: “But the final decision on this issue lies with Parliament.”

Hariri praised the deficit reduction in the 2019 budget as a victory for the Lebanese people, saying it sent a message to the international community that the Lebanese government was determined to deal with the weakness of the economy and curb the waste of public funds.

“Yesterday [Friday], we finished the budget and with it ended the bet of some people on the failure of the government to reduce the deficit and expenses and control squander. The percentage of deficit reduction is a message in all directions, to the Lebanese in the first place, to the economic sector, the financial markets and our friends in the international community,” Hariri said in a speech at an iftar hosted by the Future Movement’s liberal professions section at the Seaside Arena Saturday night.

“The message is that the Lebanese government is determined to address the weakness, imbalance and squander in the public sector and that it insists on the highest degree of transparency in implementing the CEDRE program. The 2019 budget is not the end. This budget is the beginning of a long road that we decided to take in order to lead the Lebanese economy to safe shores,” he added.

Hariri reaffirmed commitment to implement reforms the government had promised at the CEDRE conference to rescue the economy, which is suffering from a soaring national debt of $85 billion and slow growth.

“We have two choices: Either we continue as we are and wait for the World Bank to impose impossible conditions on us, as happened in Jordan, Egypt and Greece, and then we will be obliged to implement the conditions. Or we do what we are doing today, do our internal reform before reaching the danger zone,” he said.

The prime minister said one or two years after implementing the CEDRE reforms, things would move forward. “After applying the budget, you will notice that things changed, and we will see many tourists this summer, because we managed to reconcile with our brothers in the Gulf and all Arab countries,” he added.

In addition to the LF ministers’ reservations and Foreign Minister Gebran Bassil’s declaration last week that the draft budget did not go far enough in reducing the deficit and that more measures were needed, Hezbollah leader Sayyed Hasan Nasrallah also criticized the budget for including taxes that affected the poor and those with limited income.

“The 2019 budget is a very important landmark to fight corruption and stop the financial squander. ... We will not block the issuance of the budget by the Cabinet, even though there are many items which we supported and other items that we rejected because we consider they touched the poor people and those with limited income,” Nasrallah said in a televised speech Saturday marking the 19th anniversary of Israel’s withdrawal from south Lebanon.

LF leader Samir Geagea said the LF ministers sought during the budget discussions to achieve the “best possible budget.”

Separately, Rep. Eliot Engel, the chair of the U.S. House Committee on Foreign Affairs, “reinforced the United States’ commitment to Lebanon’s security, stability and prosperity” during meetings with Lebanese officials, a statement issued by the U.S. Embassy said Sunday.

During his two-day visit to Lebanon at the head of a congressional delegation, Engel held “positive and constructive discussions” with Aoun, Parliament Speaker Nabih Berri, Hariri and Bassil, “based on the depth of the relationship between the Lebanese and American people,” the statement said.

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