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BEIRUT: The Cabinet Thursday approved cuts in the expenditures for several ministries as part of its discussions on the draft 2020 state budget, while a ministerial committee began pondering new taxes as part of reform measures that would go alongside the budget. We made the necessary reductions in the budgets of ministries. We want to reduce our spending in order to give a positive signal [to the international community] about our seriousness when it comes to spending, Information Minister Jamal Jarrah told reporters after the two-hour Cabinet session chaired by Prime Minister Saad Hariri at the Grand Serail.
Today we continued the discussion of the budgets of a number of ministries and finished them, Jarrah said, adding that the Cabinet would meet Monday to resume deliberations on the 2020 budget.
Thursdays was the latest in intensive Cabinet meetings designed to examine and approve the 2020 budget before sending it to Parliament next month for final ratification.
Shortly before chairing the Cabinet session at around 5 p.m., Hariri met with Central Bank Gov. Riad Salameh to discuss the financial and monetary situation in the country, according to a statement released by the premiers media office.
Speaking to reporters after the meeting with Hariri, Salameh again reassured the Lebanese over reports of a U.S. dollar liquidity crunch in the market. There is no dollar crisis, he said.
This is the second time in as many days that Salameh sought to reassure the Lebanese, denying reports of a shortage of dollar bills in the market and saying the U.S. currency was available in banks.
The dollars liquidity is intact, Salameh told a conference Monday.
He blamed certain shortages on logistical issues, denying any broader problems.
Salameh said Banque du Liban, which had in the past intervened in the market to defend the Lebanese pound against any speculation, has foreign currency reserves that exceed $38 billion.
Local media outlets reported Thursday that while the BDLs official trading rate is fixed at LL1,507 to the dollar, money exchange shops were selling the U.S. currency at over LL1,600.
Recent media reports have said that some people have had trouble changing Lebanese pounds into dollars and withdrawing dollars at ATMs. The reports have raised eyebrows in a highly dollarized country, where more than two-thirds of residents deposits in banks are in foreign currencies - mostly dollars.
Earlier in the day, Hariri presided over the first meeting of an eight-member ministerial committee tasked with proposing essential economic reforms that would accompany the 2020 budget. The committee, headed by Hariri and formed by Cabinet Monday, would study a series of measures and reforms that must go alongside the budget. The reforms would not necessarily include imposing taxes, Jarrah said at the time.Hariri previously said that the 2020 budget would not contain any new taxes and was part of a three-year plan to stimulate the stagnant economy, which is saddled with over $85 billion in national debt, high deficit and slow growth.
However, Telecommunications Minister Mohammad Choucair, a committee member, hinted at the possibility of imposing new taxes that would go alongside the 2020 budget as part of the governments efforts to generate revenues and reduce the deficit.
We discussed five points: Freezing for three years salary increases [for public sector employees], increasing cuts in end-of-service benefits, raising the value added tax on luxury items and imposing taxes on cigarettes and gasoline, Choucair told reporters after the meeting. He added that no decision had yet been taken on these points.
Jarrah said the ministerial committee charged with studying economic reforms would pursue its work to agree on reform measures that would be outside the budget and would be sent to Parliament in the form of draft laws. This means that not everything that the committee decides will be within the budget, he said.
In reply to a question, Jarrah said the issue of Beirut Port, and the ailing electricity sector would be studied Monday by a ministerial committee charged with the electricity issue.
Earlier in the day, Hariri chaired a meeting of the ministerial committee tasked with studying the electricity sector.
The committee followed up on discussion of tender documents to award contracts for the building of two power generating plants, one in the south and the other in the north, designed to improve electricity supply and reduce endemic power rationing.
Lebanon is under international pressure to carry out a string of structural fiscal and economic reforms, including a reduction of its deficit-to-GDP ratio, in order to unlock $11 billion in grants and soft loans pledged by the international community at last years CEDRE conference.
In an attempt to reduce budget deficit, estimated at $5 billion annually, and the soaring public debt, the government has promised to fight corruption in the public administration, put an end to the waste of public funds and slash deficit in the state-run Electricite du Liban, which is costing around $2 billion in annual subsidies.
The Cabinet Wednesday requested that Finance Minister Ali Hasan Khalil, in coordination with Energy Minister Nada Boustani and Choucair, come up with a plan to save on electricity and telecoms costs in state institutions.
Last week, Hariri said that ministers would finalize the discussions by the October deadline stipulated by the Constitution.
According to the Lebanese Constitution, Cabinet should refer the budget to Parliament at the start of the latters fall session, which begins in mid-October.
Hariri also declared that the government planned to reduce the budget deficit to 7.6 percent of gross domestic product, down from more than 11 percent in 2018.
The Progressive Socialist Partys Command Council called Thursday after a meeting chaired by PSP leader Walid Joumblatt on all political parties to launch the broadest reform process before it is too late to rescue the ailing economy.
A statement issued after the meeting called for fighting corruption rampant in the public administration in order to achieve a fundamental change in the current downhill path.
In studying the aggravating electricity program, the party stresses the need to present [electricity] tender documents to the tenders department first before presenting them to the Cabinet in implementation of the Public Accountability law, the statement said.
The PSP and other parties had strongly criticized plans by the Free Patriotic Movement to reform the electricity sector by renting power-generating ships as being too expensive.
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