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Friday's budget session will be the last, Cabinet promises

There will be a review Friday of the budget strategy or the so-called interpretation of the budget in order to present it to Parliament: Minister

14 March 2017

BEIRUT: The Cabinet decided to hold a final session Friday after failing in a marathon meeting Monday to endorse the 2017 draft budget, an essential move clearing the way for final ratification by Parliament of the country’s long-awaited fiscal plan for the first time in 12 years.

“The Cabinet has finalized the state budget and will hold a final session at 4 p.m. Friday to review some figures before sending it to Parliament,” Information Minister Melhem Riachi said following a six-hour meeting chaired by Prime Minister Saad Hariri at the Grand Serail.

“All reforms to the budget have been approved. There will be a review Friday of the budget strategy or the so-called interpretation of the budget in order to present it to Parliament,” he said. “It will be the first budget in 12 years since the absence of a budget from the Lebanese treasury and the Lebanese state’s financial strategy.”

Riachi said Friday’s Cabinet session would be short. He disclosed that agreement has been reached among ministers that within 10 days after the endorsement of the draft budget, Energy Minister Cesar Abi Khalil would present a plan to revive the energy sector with the aim of saving more than $1 billion annually in electricity production.

Khalil’s plan is apparently aimed at appeasing Lebanese Forces chief Samir Geagea who has demanded that the Cabinet act to privatize electricity production as a condition for the three LF ministers to vote for the draft budget.

The marathon meeting capped more than three weeks of sessions devoted mainly to discussing budget provisions, allocations for ministries as well tax reform proposals.

The Cabinet discussion of the draft budget comes as Parliament prepares to hold a legislative session at 10:30 a.m. Wednesday to debate and approve a raft of draft laws and proposals, including a salary scale bill for civil servants and public and private school teachers.

The Cabinet’s deliberations did not touch on the public sector’s controversial salary scale motion, which was examined and approved by joint parliamentary committees last week. The committees’ discussions focused on the cost of the salary scale bill, revenues and proposed taxes to cover it.

The Parliament session on the salary scale bill comes amid escalating protests by lawmakers, labor unions, banks and private businesses against a string of taxes proposed by Finance Minister Ali Hasan Khalil to cover the cost of the bill, estimated at LL1.2 trillion ($800 million).It also comes amid frustration expressed by some teachers’ unions over what they viewed as low salary increases proposed in the bill that fell short of their expectations.

Although the Cabinet meeting was dedicated to wrapping up discussions on the draft budget, Hariri asked Foreign Minister Gebran Bassil to send a letter to the U.N. Security Council informing it of Israel’s repeated threats against Lebanon.

“The repeated threats by officials in the Israeli government, and in the media, against civilians in Lebanon and their legitimate institutions and infrastructure aim at covering up Israel’s constant violations of UN Security Council Resolution 1701, while Lebanon abides by it and calls for its full implementation,” Hariri said at the beginning of the session.

“I ask the foreign minister to prepare a list of these Israeli official stances announced in the media, and prepare a detailed letter about them to the UN Security Council so that the international community shoulders its responsibility in facing this deliberate provocation and this overt threat to regional stability,” he added.

Israeli officials routinely threaten to destroy Lebanese infrastructure and attack civilian targets in the event of another war with Hezbollah. The Lebanese government has repeatedly announced its commitment to Resolution 1701 that ended Israel’s 34-day war on Lebanon in the summer of 2006.

Kataeb Party chief MP Sami Gemayel lashed out at the government for imposing taxes on people to fund the salary scale bill instead of fighting corruption in the public administration and halting the squandering of public funds.

“The problem is on how to finance [the salary hikes]. Unfortunately, what is being put forward for a vote is increasing 22 taxes on the people. The taxes will affect all the Lebanese without exception. It’s not true that the taxes will only affect a specific class [of people],” Gemayel told a news conference. He reiterated that the Kataeb MPs will vote for the salary scale motion when it is put for a vote in Parliament.

He claimed that the annual value of tax evasion in Lebanon was around $4.2 billion. “This amount can finance four salary scales and close a large part of the [budget] deficit,” he said, accusing officials of “protecting the sources of corruption.”

Gemayel revealed that the government has paid around $9.45 billion to cover the deficit in the state-run electricity company Electricite du Liban since 2010 instead of privatizing electricity production.

Lebanon has not ratified a state budget since 2005 due to political bickering between rivals, leading to uncontrolled extra-budgetary spending in the billions of dollars.

Parliament’s final ratification of the 2017 draft budget is seen as pivotal for controlling state finances and shoring up the battered economy, burdened by a more than $74 billion in public debt.

Once the Cabinet has endorsed the draft budget and sent it to Parliament, it will gear its attention to the more sensitive and complicated issue of drafting a new electoral law amid sharp differences between rivals over which voting system to adopt for the parliamentary polls, slated for May 21.

Bassil Monday unveiled a new vote law that calls for electing half of Parliament’s 128 members under a majoritarian system and the other half under a proportional formula in totally different districts. The proposal was the Free Patriotic Movement leader’s latest initiative aimed at breaking the monthslong deadlock over a new electoral law to replace the disputed 1960 system.

But Bassil laced his proposal with a call for the creation of a senate to be headed by a non-Maronite Christian, a move that is likely to be rejected by MP Walid Jumblatt’s bloc on the pretext the senate should be headed by a Druze.

There was no immediate reaction to Bassil’s proposal from any of the major parties. The Future Movement is expected to comment on it during its weekly meeting Tuesday, while Hezbollah’s stance will be outlined in a speech to be delivered Saturday by party leader Sayyed Hasan Nasrallah. Jumblatt is also expected to respond to Bassil’s proposal during a mass rally planned in Mukhtara Sunday.

Speaking to visitors at Baabda Palace, President Michel Aoun underlined the necessity of reaching “an electoral law that achieves the best and balanced representation for all sects,” while stressing the importance of national unity, according to a statement released by the president’s media office.

© Copyright The Daily Star 2017.