Lebanon's Cabinet could discuss budget this week: source

It is likely that the 2019 draft state budget will be discussed at an upcoming Cabinet session this week despite not being on the session’s agenda, a presidential source said

Lebanon's Finance Minister Ali Hassan Khalil speaks during an interview with Reuters in Beirut October 21, 2014.

Lebanon's Finance Minister Ali Hassan Khalil speaks during an interview with Reuters in Beirut October 21, 2014.

REUTERS/Sharif Karim

BEIRUT: It is likely that the 2019 draft state budget will be discussed at an upcoming Cabinet session this week despite not being on the session’s agenda, a presidential source said Tuesday. The source told The Daily Star that the session would be held Thursday at Baabda Palace and would be chaired by President Michel Aoun.

While the source revealed that the draft budget did not appear on the session’s agenda, they said “it can still be discussed as an annex and there are contacts underway to head in this direction.”

Finance Minister Ali Hasan Khalil submitted an amended draft of the 2019 state budget to the Cabinet’s general secretariat Tuesday, he told The Daily Star.

After Khalil had submitted a previous draft budget at the beginning of this month, it was retrieved for additional amendments, a Finance Ministry statement later said.

“Austerity measures were added to the draft in light of the financial situation,” the statement added.

Prime Minister Saad Hariri has been striving to secure political consensus over austerity measures the government plans to adopt in the budget in order to cut expenditure, reduce the budget deficit and stimulate the sluggish economy.

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.

Tension erupted over the weekend after Aoun criticized the delay in preparing the budget, in comments believed to be targeting both Hariri and Khalil.

Speaking to news website Mustaqbal Web, Khalil denied that Hariri had been slow to put forward the budget to Cabinet ministers.

Khalil said most politicians on all sides with whom Hariri had consulted on the budget had asked for more time to discuss it. “Hariri wanted to wait until he had all the answers in order to secure the best consensus atmosphere to discuss the budget,” Khalil told the news outlet.

“If [Hariri] gets all the answers he wants ... I think he will call for a ministerial meeting tomorrow [Wednesday] in order to discuss the desired [draft],” Khalil said.

At the weekly meeting of Hariri’s Future Movement parliamentary bloc, the MPs stressed that the basis for any budgetary rescue plan was establishing political consensus on the measures necessary to end the squandering of public money.

“Work on the state budget and putting the final touches on it are heading in the right direction,” the bloc said in a statement after the meeting, chaired by MP Bahia Hariri. “The mission led by Premier Hariri and his keenness to hold talks with the different sides ... must lead to the desired goals - to secure Cabinet’s approval of the budget.”

The bloc also implicitly responded to Aoun’s comments on the budget delay, calling on all those involved to be aware “of the crucial moment that Lebanon is facing on the economic and financial levels.”

It also called on the various sides to “rise above ... political bickering.”

Speaking during the opening ceremony of the Arab Banking Conference for 2019, Hariri reiterated that his government was committed to fighting corruption and putting an end to the squandering of public money.

“We want to carry out the necessary reforms for the benefit of the Lebanese citizen. In the end, what concerns me is this reform. I do not have a problem with who takes the credit,” he said. “I am totally confident that the president and the speaker are very keen to have austerity measures, stop the squandering, fight corruption and develop our laws in the necessary manner.”

Local newspaper Al-Joumhouria reported that Speaker Nabih Berri told visitors that the budget should be passed and submitted to Parliament before May 31, when an extended spending measure expires.

“I previously said and I repeat, [Cabinet must] expedite the budget and stop wasting time. Parliament is waiting and there is a specified time for the government to spend based on the provisional 12th that ends on May 31,” Berri was quoted as saying.

In March, Parliament approved extending until the end of May an emergency spending facility in the Constitution known as the “provisional 12th.”

At the time, Berri gave the government a month and a half to endorse the budget, after which Parliament would have the same amount of time to ratify it.

“The budget is supposed to be passed [by Cabinet] and sent to Parliament before this date, since [Parliament] needs at least a month to study it in the Finance [and Budget] Committee before sending it to the Parliament secretariat,” Berri said, according to Al-Joumhouria.

As reports of the impending austerity measures intensified over the past several days, fears have arisen among public servants - including military personnel - that their wages and end-of-service benefits will be affected.

Defense Minister Elias Bou Saab said that his ministry and the Lebanese Army were ready to work to cut expenses in a manner that would not affect the rights of security personnel.

“We may reach the reductions we’re aiming for without touching the wages,” he said.

Interior Minister Raya El Hassan also touched on the budget issue during a meeting with General Security personnel.

“I understand the fear and concern among everyone following up on the budget talks, and I assure you that we will work to mitigate its negative impact on pensions and monthly wages,” she said. “But at the same time, we should know that the country is passing through difficulties.”

Also Tuesday, Aoun signed a decree releasing overdue payments to municipalities for 2017 from the Independent Municipal Fund.

Decree No. 4576 released LL700 billion (around $460 million) for municipalities and municipal unions, a statement from Aoun’s office reported. The decree was signed by the prime minister, interior minister and finance minister.

Municipal workers across the country have recently protested on multiple occasions to demand overdue allocations from the Independent Municipal Fund for 2017 and 2018. The funding for 2019 is not yet due. - Additional reporting by Sahar Houri

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