Lebanon's budget not on agenda for Cabinet session

Contrary to expectations, the draft budget was not listed on the Cabinet agenda, which includes 38 items, most of them dealing with financial and administrative matters

Image used for illustrative purpose. A Lebanese trader monitors the market at the Byblos bank dealing room in Beirut October 13, 2008.

Image used for illustrative purpose. A Lebanese trader monitors the market at the Byblos bank dealing room in Beirut October 13, 2008.

REUTERS/ Jamal Saidi

BEIRUT: The 2019 draft state budget will not be discussed at Thursday’s Cabinet session because it has not been distributed to ministers, signaling that an accord is still lacking on the austerity measures the government plans to take to reduce the deficit, sources said Wednesday.

Weekend tensions that arose between President Michel Aoun and Prime Minister Saad Hariri over the delay in presenting the budget cast gloom on the weekly Cabinet session set to be chaired by Aoun at Baabda Palace.

Contrary to expectations, the draft budget was not listed on the Cabinet agenda, which includes 38 items, most of them dealing with financial and administrative matters. Despite the planned austerity measures, the agenda includes bills calling for raising the minimum wage and salaries of hundreds of employees and workers in a number of public institutions, including the Railways and Public Transport Authority, idle since 1992.

“So far, the draft budget has not been distributed to ministers despite the fact that the finance minister has submitted an amended draft of the 2019 state budget to the Cabinet’s general secretariat,” a political source familiar with the budget negotiations told The Daily Star.

“This means that no agreement has so far been reached among the main blocs on the austerity measures to be adopted by the Cabinet.”

Despite not being listed on the agenda, the source noted that the draft budget could be approached as “a political topic,” or Finance Minister Ali Hasan Khalil, if asked by the president or the prime minister, could expound the broad lines of the fiscal plan, along with the austerity measures and cuts in all ministries’ spending to slash the deficit.

But a political adviser to Hariri said that under the Constitution, only the president or the premier could bring up issues not listed on the Cabinet agenda.

“Under the Constitution, only the president and the prime minister can raise topics not listed on the agenda, which is prepared by the prime minister,” former Future Movement MP Ammar Houri told The Daily Star.

The lack of accord on the measures notwithstanding, Houri said: “Eventually, the draft budget will pass in the Cabinet, along with the austerity measures to rescue the economy.”

In the latest of his consultations on the draft budget, Hariri met Wednesday with Central Bank Gov. Riad Salameh at the Grand Serail, discussing with him the financial and economic situation in the country, a statement released by the premier’s media office said.

Houri said he was not aware of a meeting that reportedly was to be chaired by Hariri at the Grand Serail Wednesday night to agree on the austerity measures on the eve of the Cabinet session. The meeting would have been similar to one held by Hariri last week and attended by Khalil from the Amal Movement, Foreign Minister Gebran Bassil, the head of the Free Patriotic Movement, and representatives from Hezbollah, the Lebanese Forces and the Progressive Socialist Party.Speaking to reporters after attending a meeting of the parliamentary Development and Liberation bloc headed by Speaker Nabih Berri at the speaker’s Ain al-Tineh residence, Khalil denied reports about such a meeting. “Prime Minister Hariri is holding consultations with all the parties to agree on the austerity measures,” Khalil said.

Khalil also said that the amended draft of the 2019 budget he submitted to Cabinet’s general secretariat Tuesday would not affect the salaries and wages of middle-income earners or the poor, or impose new taxes on them or increase fuel prices. The new draft - a revised edition of a budget Khalil had submitted in August - includes austerity measures that “were added to the draft in light of the financial situation,” a Finance Ministry statement said.

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

Youth and Sports Minister Mohammad Fneish, one of three Hezbollah ministers, said he had not received a copy of the draft budget, adding that his party had prepared answers to the proposed austerity measures.

“Our position on the draft budget is known and was outlined by [Hezbollah leader] Sayyed [Hasan] Nasrallah. We have prepared the party’s answers to the government’s financial readjustment,” Fneish told The Daily Star. He said it was up to the president and the prime minister to discuss the draft budget at Thursday’s Cabinet session despite not being listed on the agenda. In a televised speech Monday, Nasrallah said his party was open to all discussions on the budget, but rejected imposing new taxes or touching the salaries of the poor or those with limited income.

During his weekly meeting with lawmakers at his Ain al-Tineh residence, Berri reiterated that the draft budget would not affect poor people, those with a limited income and even the middle class.

“During the budget discussions, Parliament will stand against such proposals and measures, while reaffirming that this matter is not on the table,” MP Ali Bazzi from the speaker’s bloc quoted Berri as saying. Highlighting the importance of slashing the budget deficit in order to “overcome this complicated situation,” Berri also underlined the need for “everyone to contribute toward rescuing the country from the difficult economic situation.”

Interior Minister Raya El Hassan said Hariri was doing his best to finalize an austerity budget. “In the end, we are all responsible. The Cabinet will begin discussing the budget issue from tomorrow [Thursday]. I don’t imagine that there is anyone who is not aware of the importance of endorsing an austerity budget as soon as possible,” Hassan said after meeting with Maronite Patriarch Beshara Rai in Bkirki.

The Cabinet session will be held against the backdrop of tensions that erupted over the weekend after Aoun criticized the slowness in preparing the budget, in comments believed to be targeting Hariri and Khalil.

While Khalil denied that Hariri had been slow to put forward the budget, the premier has sought to defuse tensions with Aoun, saying he cared only for the outcome of attempts to reach an austerity budget to salvage the economy.

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