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|15 May, 2019

Lebanon's Cabinet works to finalize budget as pressure mounts

The Cabinet seeks to wrap up its discussions on the 2019 fiscal plan by Wednesday

Lebanese President Michel Aoun heads the first meeting of the new Saad al-Hariri's cabinet at the presidential palace in Baabda, Lebanon, February 2, 2019.

Lebanese President Michel Aoun heads the first meeting of the new Saad al-Hariri's cabinet at the presidential palace in Baabda, Lebanon, February 2, 2019.

REUTERS/Mohamed Azakir

BEIRUT: The Cabinet, facing mounting street pressure from state employees and military veterans over proposed cuts to their wages and retirement benefits in a draft austerity budget, will seek to wrap up its discussions on the 2019 fiscal plan by Wednesday after several ministers made proposals to reduce spending. The announcement was made by Finance Minister Ali Hasan Khalil, who said the draft budget was likely to be finalized by Wednesday, when ministers would hold two Cabinet sessions to push through discussions on the draft.

“We are expected to finish studying the draft budget tomorrow [Wednesday], and this is [Prime Minister Saad] Hariri’s approach,” Khalil told reporters after Tuesday’s Cabinet session chaired by Hariri at the Grand Serail.

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Information Minister Jamal Jarrah also said the Cabinet would meet around noon Wednesday, followed by another session after iftar if needed.

“Today’ meeting was supposed to be the last one. We completed the budgets of the Education and Defense ministries after receiving the figures related to them,” Jarrah told reporters after the meeting. “Also, a number of ministers presented proposals about growth and economic reforms. These proposals are not studied with the budget, but can help the government carry out economic and tax reforms,” he said.

He added that the ministers who presented the written proposals were Deputy Prime Minister Ghassan Hasbani, Foreign Minister Gebran Bassil, Environment Minister Fadi Jreissati, Education Minister Mohamed Choucair and others.

Asked what amounts these proposals will bring to the budget figures, Jarrah said: “These figures are not in the budget but accompany it and will be sent to Parliament with the budget. There are no final estimates yet about the amounts that they can bring, and we cannot know the amounts that any law can collect.

“We have to wait for Parliament’s approval or amendment. Only then can the revenues be estimated.”

Jarrah said the ideas presented by the ministers are reformist ideas related to the taxation law, the real estate law, the Beirut Port and others.

If the Cabinet wraps up the budget talks Wednesday, it will meet under President Michel Aoun at Baabda Palace later this week to endorse the draft and send it to Parliament for final ratification.

Tuesday’s was the 12th Cabinet session in a series of meetings dedicated to examining the draft budget, which seeks to reduce state spending and generate revenues in order to cut the deficit, a key demand of international donors. Among measures it has so far endorsed to generate revenues, the Cabinet has approved raising taxes on interest from bank deposits from 7 to 10 percent for three years. It has also decided on a 20-percent funding cut for all the ministries as part of the austerity measures that seek to reduce the deficit to 8 percent of GDP, down from more than 11 percent last year. Last year’s deficit was estimated at $6.7 billion.

After the Cabinet session, Bassil chaired the weekly meeting of the Free Patriotic Movement’s parliamentary Strong Lebanon bloc, after which he announced his proposals to reduce the budget deficit.

Bassil called for curbing the squandering of public funds as well as tax and Customs tariff evasion. He urged all ministries to cut spending.

“After 12 sessions, we did not make a big difference because the matter needs a clear political decision required from all of us to take in order to achieve a real and reformist budget different from previous ones,” he said.

Among the proposals, Bassil called for the closure and cancellation of “unproductive and fictitious institutions” and the cancellation of “unproductive partnership contracts” with the Education, Health, Social Affairs and other ministries.

The Future Movement’s parliamentary bloc expressed its satisfaction with the progress made so far in the Cabinet discussion on the draft budget. It called for approaching the budget figures from the basis of safeguarding the “national interest and protecting the national economy from the tendency to search for political gains.”

“The political atmosphere surrounding [the budget discussions] reflects the spirit of consensus required to finalize the budget that will be up to the economic, financial and social challenges facing the country and which Prime Minister Saad Hariri is keen on achieving among the priorities of the national interest,” the bloc said in a statement issued after its weekly meeting chaired by Sidon MP Bahia Hariri.

Meanwhile, Aoun called on the government to curb the squandering of public funds and achieve economic stability through a budget that seeks to reduce the deficit.

“Political stability and security stability have been achieved, and so was our financial regularity, thanks to our determination to promote the long-awaited state’s project with all its pillars, and there remains achieving economic stability, stopping embezzlement of public funds and holding the perpetrators accountable,” Aoun said in a speech during an annual iftar he hosted at Baabda Palace that was attended by Speaker Nabih Berri, Hariri, ministers, lawmakers, top Muslim and Christian religious leaders and other dignitaries.

“The challenge ahead of the government today in putting up the 2019 budget does not only lie in acceptable and balanced rationalization and reduction, but rather in its capacity to provide two elements to stand up to the crisis that is striking the country and the people,” he said.

“First, to locate flaws, waste and corruption and eradicate them. Second, to endorse the economic function of the budget after long denial and absence, to embark afterward on really addressing the deficit in its two aspects, the financial and the commercial, in light of a sole consideration: the people’s higher interest,” he added.

Aoun appeared to be confident that Lebanon would overcome the economic crisis. “Today, Lebanon is going through a difficult economic, financial and social crisis, and many of its causes are inherited and heavy, but it is transient, and we are capable of getting over it if we cooperate and join forces for rescue,” he said.

“The Lebanese currency is well and there is no danger threatening it. The difficulty that we are going through is transient and limited, and we hope that next year we will have found a way out of it, and our economic situation will have improved,” he added.

Aoun criticized street protests and strikes staged by labor unions and military veterans over the past two weeks against proposed cuts to their wages and retirement benefits. “Let us save ourselves, accept the sacrifices that are temporarily required, and stop the sit-ins, strikes, demonstrations and paralysis of public and private work sectors, which deepen the gap between what we strive for and the bitter reality,” he said.

Ahead of the iftar, Aoun, Berri and Hariri held a closed-door meeting, the state-run National News Agency reported, without giving further details.

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