His remarks came as the Cabinet prepared to hold a new round of talks Friday on a draft austerity budget that seeks to reduce state spending and generate revenues in order to slash the deficit, a key demand of international donors.
“All of us must work to emerge from this economic situation because we really have an opportunity. It’s true we are saying we want to live in austerity, tighten the belt and reduce expenditures. But at the same time, there is the CEDRE project that involves $12 billion [to finance] infrastructure,” Hariri said.
He added that the implementation of infrastructure projects would create between 30,000 and 50,000 job opportunities annually.
“I can assure you that with this budget, we will reach solutions that satisfy everyone ... I am not saying we will live in austerity for 10 years,” Hariri said.
Underlining the importance of enacting a series of key fiscal and economic reforms recommended at the CEDRE conference, Hariri said: “Things might be difficult these days. But in the coming days after the endorsement of the budget, things, God willing, will be better.”
The reforms are deemed essential to unlock over $11 billion in grants and soft loans pledged by international donors at last year’s CEDRE conference held in Paris to bolster the ailing economy, which is suffering from a soaring national debt of $85 billion, slow growth and a high budget deficit.
Hariri reiterated that the Lebanese pound was in good shape, despite rumors that the country was on the verge of bankruptcy.
French Foreign Minister Jean-Yves Le Drian also called on Lebanon to implement the CEDRE conference’s decisions to achieve economic recovery. Le Drian was in Beirut to represent French President Emmanuel Macron at the funeral of Maronite Patriarch Cardinal Mar Nasrallah Boutros Sfeir in Bkirki.
“I wanted to be here today to represent President Macron and say to the Lebanese that France is always present to stand by their side in happy times, but also in difficult times,” he said in remarks carried by the state-run National News Agency.
“Lebanon’s independence, stability and security are inviolable principles,” he added.
Le Drian said France was always ready to keep its promises made at the CEDRE conference. “The CEDRE conference grants Lebanon the necessary means for [economic] recovery and to find the road to tranquility and unity,” he said.
Earlier in the day, Finance Minister Ali Hasan Khalil said the 2019 draft state budget had made a very big reduction in the deficit. “The draft budget has been printed at the Finance Ministry after amendments were introduced to it. We have achieved a very big reduction in the deficit rate but I will not go into figures now,” Khalil said in a statement.
Khalil, who met with Central Bank Gov. Riad Salameh Wednesday to discuss, among other things, Cabinet’s plans to issue between $2.5 billion and $3 billion in Eurobonds, said there was no problem with the government meeting its financial obligations on time.
“All dues will be paid on time,” he said, clearly referring to the $650 million in Eurobonds maturing on May 20. Parliament has authorized the government to borrow over $4.8 billion in Eurobonds to finance all the needs of the state for 2020.
On the eve of a Cabinet session set for 1:30 p.m. Friday at the Grand Serail to continue discussions on the draft austerity budget, Khalil tweeted: “The ministry’s work team is making a final review today [Thursday] of the budget figures to finalize the draft before tomorrow’s session.”
Friday’s will be the 14th Cabinet session in a series of meetings dedicated to examining the draft budget.
However, following 13 sessions and a number of missed deadlines, the latest passing Wednesday, ministers remained split over controversial measures related to proposed cuts to public-sector wages and benefits, including those related to military veterans. Nor have they agreed on slashing the wages of public officials, including themselves, MPs and other top officials, in a move that is supposed to instill confidence in the government more than having any significant financial effect.
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 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.
Youth and Sports Minister Mohammad Fneish, one of three Hezbollah ministers, said if the ministers’ discussions on the controversial austerity measures did not end Friday, the budget talks would resume Monday. “Tomorrow’s Cabinet session will discuss reformist and economic proposals with the aim of finding new revenues and new cuts in spending,” Fneish told The Daily Star Thursday.
Asked if the discussions would involve proposed cuts to the salaries and social benefits of public-sector employees and retired military personnel, Fneish said: “This depends on the final budget figures to be presented by the finance minister tomorrow [Friday].”
Cabinet’s slow progress on the budget comes amid mounting street pressure from state employees and military veterans over proposed cuts to wages and retirement benefits.
On the eve of the Cabinet session, the League of Public Administration Employees called for a general strike Friday in all public administrations to express its condemnation of “any measure aiming to hold the employees and those with limited income responsible for the consequences of wrong policies that were the cause of squandering the Treasury’s funds.”
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