Lebanese PM seeks to defuse tensions with Aoun over draft budget

Last year’s budget deficit was estimated to have stood at $6.7bln, or 11% of GDP

Lebanese Prime Minister-designate Saad al-Hariri gestures as he speaks during a conference in Beirut, Lebanon, December 21, 2018.

Lebanese Prime Minister-designate Saad al-Hariri gestures as he speaks during a conference in Beirut, Lebanon, December 21, 2018.

REUTERS/Mohamed Azakir

BEIRUT: Prime Minister Saad Hariri sought Monday to defuse tensions with President Michel Aoun over the 2019 draft state budget, saying he cared only for the outcome of ongoing attempts to reach an austerity budget to rescue the ailing economy.

Speaking to reporters after receiving Saudi royal court adviser Abdullah al-Rabeeah at his Downtown Beirut residence, Hariri sounded upbeat that the draft budget, which includes austerity measures and reductions in all ministries’ spending, would be ready for discussion at the weekly Cabinet session set for Thursday.

“It’s true that there is austerity, but it’s not true that there will be no money in the country. This austerity will bring all CEDRE projects to the Cabinet table, after which we begin implementing one project after the other. This is the basis, to have growth with austerity,” Hariri said, according to a statement released by his media office.

Hariri, who returned from a short family visit to Riyadh, was referring to important investment and infrastructure projects in Lebanon to be financed by international donors who pledged over $11 billion in grants and soft loans at last year’s CEDRE conference.

The Paris event was held to garner support to shore up Lebanon’s economy, reeling under $85 billion in public debt, an endemic budget deficit and slow growth.

Last year’s budget deficit was estimated to have stood at $6.7 billion, or 11 percent of GDP, though the final figures have not been released.

However, the release of the CEDRE funds has been contingent on the implementation by the Lebanese government of a string of key structural and sectorial fiscal and economic reforms designed to reduce the budget deficit and restructure the dilapidating electricity sector, which is straining the state Treasury to the tune of $2 billion annually.

Asked to comment on a statement at Easter by Aoun, who criticized the slowness in preparing the 2019 budget, Hariri said: “I don’t want to respond. I understand that all political parties want to take credit, but for me, it is the outcome that counts and for the Cabinet to approve a budget that contains large-scale reforms for the benefit of the future of our children. What is important to us is that we all participate in this.” He added that 2019 budget would be ready for discussion at the Cabinet session Thursday.

Speaking to reporters after a closed-door meeting with Maronite Patriarch Beshara Rai before attending Sunday’s Easter Mass in Bkirki, Aoun said Lebanon was going through a crisis and didn’t have the luxury to wait longer for a solution. In particular, he criticized the slowness in finalizing the 2019 budget and presenting it to the Cabinet.“We are going in Lebanon today through a crisis that is being dealt with, hoping it will end very soon because the situation does not allow the luxury of time. Those who do not have skills to end it quickly, let them come to Baabda [Palace] and we will end it for them. This slowness is not acceptable,” Aoun said. He added that he hoped everyone would work day and night to resolve the economic crisis. However, the president didn’t say who he was referring to when asked by reporters.

A Baabda Palace source said Aoun did not mean Hariri or Finance Minister Ali Hasan Khalil in his statement. “The president’s statement was meant to urge the acceleration of the draft budget and its presentation to the Cabinet,” the source told The Daily Star.

Aoun expressed optimism that Lebanon would be able to overcome the crisis. “The crisis is difficult, but it is not difficult to overcome.

“We passed the electricity plan and we will pass the budget, and later the economic plan and the environment [plan] after it,” he said. “Lebanon will thrive and gradually emerge from the difficulties it faces.”

In his statement after meeting the Saudi envoy, Hariri stressed that reform and austerity measures in the 2019 budget required political consensus.

He said the main reason delaying the completion of the budget was “to ensure that we can all agree on all the figures and reductions that we want to implement because economy, growth and reform are not the responsibility of one party, but of all parties, and they are partners in this reform.”

“Saad Hariri cannot carry out reform alone, nor can the president of the Republic or Speaker Nabih Berri. Any of the political parties in the Cabinet cannot carry out reform alone, because it is done through consensus between us all. The same goes for the austerity measures we want to take. Because we are keen on the Lebanese citizen, state and employees in the administrations and on preserving their benefits,” Hariri said. “No one in politics has a hobby of taking anything away from anyone. What is important is that we can implement all CEDRE projects that contribute to the growth of the economy.”

Hariri has been striving to secure political consensus over austerity measures the government plans to adopt in the 2019 budget in order to generate revenues, cut the budget deficit and stimulate the sluggish economy.

Meanwhile, Hezbollah leader Sayyed Hasan Nasrallah weighed in on the economic crisis by declaring that the approval of the 2019 budget provided “a golden opportunity” to put an end to the squandering of public funds.

“There is unanimity in Lebanon that the financial situation is in crisis. There is also unanimity on the need to find a solution. We hope that the solution will come through the Lebanese themselves, but it seems that the solution will be in spite of us through the CEDRE and World Bank conditions,” Nasrallah said in a televised speech on the 34th anniversary of the founding of the Imam al-Mahdi Scouts. “There is unanimity on political cooperation to find a solution. ... There is unanimity that the solution is not easy and that it requires difficult decisions,” he said.

“A solution [to the crisis] should be the responsibility of everyone. This solution will lead to some austerity. Therefore, we must display a spirit of responsibility during the discussions [on the budget] and act wisely and bravely when proposals are made,”Nasrallah said. “We consider the ongoing discussions [on the budget] as a golden opportunity to put an end, to a large extent, to the financial waste and administrative corruption. We view the budget as the beginning of reforms.”

He added that Hezbollah was open to all discussions on the budget, while it rejected imposing new taxes or touching the salaries of poor and those with limited income.

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