|16 September, 2019

Hariri: 2020 budget part of three-year plan to revitalize economy

The draft 2020 state budget, which the Cabinet will begin discussing this week

BEIRUT: The draft 2020 state budget, which the Cabinet will begin discussing this week, will not contain any new taxes and is part of a three-year plan to revitalize the flagging economy, Prime Minister Saad Hariri said Sunday night. Hariri spoke to reporters after a meeting with Walid Joumblatt at the Progressive Socialist Party leader’s residence in Beirut’s Clemenceau area.

The talks, which were attended by Industry Minister Wael Abu Faour and former Minister Ghattas Khoury, a political adviser to Hariri, focused on the draft 2020 budget, the economic situation, the essential reforms the government has promised to carry out to shore up the economy in line with recommendations made at last year’s CEDRE conference, and developments in the region.

“The essential idea is to be able to approve the budget within the constitutional deadline. This matter has not happened for a long time. The basis of the 2020 budget is a three-year plan to face all [economic] challenges,” Hariri said, with Joumblatt standing next to him. “We must work quickly to serve the country’s interest. ... What matters in this budget is how to confront challenges at the economic and financial levels.”

“The economic vision of the 2020 budget calls for linking this budget to the 2021 and 2022 budgets and to be accompanied by measures over the next two years. With this, we will steer Lebanon to safe shores,” Hariri said. “We need to reach a time where spending equals revenues.”

Essentially, Hariri said, the 2020 budget would not include taxes, adding that the government could generate revenues from the closure of illegal crossings on the border with Syria.

The premier stressed that the government planned to reduce the budget deficit to 7.6 percent of gross national product, down from more than 11 percent in 2018.

Asked to comment on possible objections from some political parties to the reform measures envisaged in the 2020 budget, Hariri said: “The country must advance and the economy must be revitalized.”

In reply to a question, Hariri said the Lebanese Forces, which was sidelined in the latest judicial and administrative appointments, is “a main component of the government and it must have a share in the [upcoming] appointments.”

Joumblatt, who hosted a dinner for Hariri, said after the meeting: “We may agree on some matters and we may disagree on others. But what matters is the country’s interest.”

Earlier in the day, Finance Minister Ali Hasan Khalil said the Cabinet was set to begin Tuesday discussing a draft 2020 state budget that did not contain any new taxes, while seeking to further reduce the deficit.

“Because the 2019 budget took a long time to be endorsed, we will work in the Cabinet to expedite discussion of the draft 2020 state budget and send it to Parliament in October to be ratified ahead of the constitutional deadline,” Khalil told The Daily Star.

As promised by Hariri, Khalil said the 2020 budget would not contain any new taxes or dues and would seek to further reduce the deficit.

During the Cabinet session to be chaired by President Michel Aoun at Baabda Palace Tuesday, Khalil said he would hold a preliminary reading of the draft 2020 budget before ministers began discussing it.

Afterward, he said, the prime minister would call for successive special sessions to examine the budget. Khalil added that copies of the draft budget had already been distributed to ministers for review ahead of Tuesday’s session.

Parliament in July ratified the 2019 state budget, which already sought to address Lebanon’s fiscal woes by reducing the deficit-to-gross domestic product ratio to 7.6 percent, down from more than 11 percent in 2018. According to the Constitution, Cabinet should send the budget to Parliament in October; Parliament then has until the end of the year to pass it.

Lebanon is coming under mounting international pressure to forge ahead with implementing a string of key structural economic and fiscal reforms recommended at the CEDRE conference.

The reforms are designed to bolster the flagging economy, which is saddled with a soaring national debt of $85 billion, equivalent to about 150 percent of GDP, slow growth and a high budget deficit.

The reforms are deemed essential to unlock over $11 billion in grants and soft loans pledged by international donors at the CEDRE conference to stimulate the stagnant economy and finance key infrastructure projects that the Lebanese government outlined in its Capital Investment Program.

In an attempt to reduce budget deficit, estimated at $5 billion annually, and soaring public debt, the government has promised to fight corruption in the public administration, curb the waste of public funds, overhaul the electricity sector and slash deficit in the state-run Electricite du Liban, which is costing around $2 billion in annual subsidies.

In addition to discussing the draft 2020 budget, ministers will also address a 26-item on the Cabinet agenda, which includes a new batch of administrative appointments.

The Cabinet is expected to appoint Mazen Soueid, who is backed by Hariri, as a new head of the Investment Development Authority of Lebanon, replacing Nabil Itani, a source at Baabda Palace told The Daily Star.

The Cabinet will also appoint a new head of the Higher Privatization Council, the source said.

The Cabinet last week approved a series of long-awaited key judicial jobs, including the appointment of a new head of the Higher Judicial Council, a state prosecutor, a head of the State Shura Council, the country’s highest administrative court, and a new head of the Court of Audit, whose job is mainly to check and audit the accounts of state institutions, including spending of state budgets.

The judicial appointments underscored the government’s resolve to fight rampant corruption in the public administration and curb the waste of public funds, a key demand of international donors.

Hariri is set to leave later in the week for Paris, where he is scheduled to hold talks Friday with French President Emmanuel Macron on the implementation of CEDRE investment projects.

The CEDRE conference was hosted by France in April last year to rally financial support for Lebanon.

Hariri said Friday the CEDRE decisions would be launched after his meeting with Macron.

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