Beirut
- The Lebanese people's fears are rising after the government approved the 2022 draft budget, amid estimates that it will perpetuate the reality of poverty, which affects about 80% of the population, while the government includes its budget within its quest for rescue, recognizing that "the recovery plan is a very difficult process."
Citizens expressed their indignation when Prime Minister Najib Mikati called for "tolerating each other", acknowledging absolute bankruptcy, and many stressed their inability to withstand the absurd reality that applied to livelihoods in Lebanon.
The 2022 budget in Lebanon is of exceptional importance, both internally and externally, as it is a mandatory crossing point for the Beirut agreement with the International Monetary Fund on a support program, if it is convincing and transparent and is accompanied by reforms and a comprehensive recovery plan, financially, economically and socially.
budget draft
Last Thursday, the Lebanese government approved the draft budget after 8 sessions of discussion, and referred it to Parliament for study, before it enters into force, and it may take many weeks to sink.
The budget deficit reached 17%, while it may reach 29%, because it excluded the electricity advance and the plan to treat it, according to what the economist and former syndicate of certified accountants in Lebanon, Amin Saleh, confirms to Al Jazeera Net.
Saleh describes the draft budget as bad, as it "did not take an exceptional and investment nature at the level of the historical crisis, and was limited to a distorted estimate of expenditures and imports without development plans."
Rather, it will contribute - according to him - to deepening the state of poverty, deflation and inflation, based on many facts mentioned in it, including:
Excluding electricity from the budget, a behavior that has been going on since 1993 and in violation of the laws, as it is dispensed with treasury advances, while electricity advances are spending, and the Electricité du Liban cannot cover treasury advances, and therefore, it must be calculated with the budget deficit.
The plurality of exchange rates in the budget for the various estimates of expenditures and imports, and the adoption of two currencies for the calculation, which loses transparency and clarity.
Increasing tax burdens and fees on goods and services, that is, internal consumption fees, including value-added tax, by 424%.
The budget imposed only 19% as taxes on income and profits (affecting owners of capital), and raised taxes on property and real estate by about 218%.
Calculating the customs dollar according to the exchange rate of the dollar on the exchange platform of the Banque du Liban (which is mobile and currently stands at about 20 thousand and 800 pounds) in exchange for giving the Minister of Finance an exceptional authority to announce the price monthly.
Accordingly, according to Saleh, customs duties (with the exception of some basic food commodities) will increase by about 618%, but "taxes and fees are one cycle, and the operational cost will increase on all basic and luxury commodities."
Paying about 60% of the amount allocated to pay the interests of the public debt to the Banque du Liban and commercial banks, instead of writing them off.
The budget has reduced government investment spending to about 4%, down from about 7%. This means that expenditures are not allocated to improve public services and rehabilitate dilapidated infrastructure.
Here, Mounir Rashid, head of the Lebanese Economic Association and a former expert at the International Monetary Fund, considers that the budget suffers from major gaps;
What makes it lose its reformist character, especially in terms of expenditures, highlights the fact that it does not include the debts of Eurobonds, which alone amount to about $39 billion.
He said that the budget does not serve these debts and reschedule them with investors after Lebanon has failed to pay its dues since March 2020.
Rashid adds some notes on the budget:
It did not note the expenditures of major state institutions, foremost of which is the Council for Development and Reconstruction and various specialized councils.
The budget set a large amount for its revenues, about 40 trillion pounds, without specifying the mechanism for its fulfillment.
It granted some cash "aid" to employees without noticing any expenses on the Social Security Fund, while it is responsible for paying about 25% of the medical services for the insurance.
Observers believe that the IMF may reach the stage of despair in dealing with the ruling elite in Lebanon (Al-Jazeera)
Workers' and citizens' concerns
Here, Castro Abdallah, head of the National Federation of Trade Unions and Employers in Lebanon, talks about what he calls the disastrous repercussions of the budget on workers, "because it has written off an essential part of the accumulated government debts to social security."
Abdullah told Al Jazeera Net that the Lebanese authorities are bearing the Lebanese people and their poor the weight of corruption that is more than 30 years old, by striking social security and end-of-service compensation, and by imposing more taxes and fees for nothing, recalling that the citizen is subject to the chaos of the money market, monopolistic traders and banks that refrain from paying deposits. perfect.
The head of the union considers that the authority wants to collect its revenues from people’s pockets, despite the presence of other sources, such as taxes on large capitals, who constitute about 1% and control the country’s wealth. They can also be collected from fining aggressors on marine property, commons and religious endowments.
Abdullah talks about moves that are being prepared among the unions, "because our goal is to bring down the budget and protect citizens from its repercussions."
For his part, Charles Arbid, head of the Economic and Social Council in Lebanon, believes that this budget is a natural result of the political and governmental situation that controls the joints of its provisions.
He told Al Jazeera Net that the actual goal was to reach a balanced budget, with zero deficit, until we reach the threshold of reform.
He is expected to cross the budget in Parliament despite the political differences over it, "because the political forces will not be able to produce a better one, specifically before the parliamentary elections in May 2022."
IMF position
The problem at the moment revolves around the position of the International Monetary Fund on this budget, and observers believe that the Fund may reach the stage of despair in dealing with the ruling elite in Lebanon, which was manifested by its suspension the day before yesterday, Friday, February 11, with the conclusion of talks that lasted more than two weeks through Internet with Lebanese officials.
The Fund described the Lebanese crisis as "complicated and unprecedented", and stressed that Lebanon would not be granted any financial support unless the government embarked on ambitious and necessary reforms, considering that the budget may provide an opportunity to correct the catastrophic budget situation, but it considered that the unprecedented magnitude of losses in the financial sector must be addressed in a manner transparent.
Here, Munir Rashid states that the budget did not include a plan to reform the banking sector and to address losses estimated at $69 billion.
The former expert at the International Monetary Fund refutes the reasons that may lead to his non-acceptance of the budget, with some points, including:
The quality of taxes imposed contribute to the deepening of the economic stagnation.
The fund will not accept a large budget deficit, and the lack of transparency in determining its value, and focuses on addressing the losses of the electricity sector, because the state’s debts, estimated at 32 billion dollars, are mostly due to electricity advances and deals.
The Fund will not approve a budget that does not include social services in line with its demand to provide a social safety net.
He recalled that Lebanon has funding from the World Bank of about 248 million dollars for social support, which was not included in the budget either.
The Fund will not accept multiple exchange rates within the budget, while it calls for the unification and liberalization of the exchange rate, and refuses to exaggerate revenue figures without transparency of their sources.
Rashid points out that the actual crisis lies in the financial policies that the Fund demands to reform, "because people put their money in the banks, and the banks put it in the central bank, and the latter spent it as debts to the state without legal and constitutional right and at the expense of the economy, depositors, and Lebanese, Arab and foreign investors."
Saleh is likely that the Fund will demand that the budget be re-drafted with other criteria, but in the event that the Lebanese government does not respond, it is expected with Amin Saleh that the horizon will be blocked by Lebanon’s negotiations with the IMF, “especially since the government did not take any reform step that restores economic activity, did not schedule and restructure its debts and did not It determines how it will be financed”, which makes the completion of the recovery plan - according to Saleh - a more complex issue than the budget.