BEIRUT: Finance Minister Ali Hasan Khalil pledged Tuesday to secure funds for the controversial salary scale without burdening low-income families with new taxes, while suggesting that Lebanese banks must share the burden.
“I want to stress that we are committed to the implementation of the proposed salary hike [for civil servants and school teachers] although the ministry is not taking part in the parliamentary committee discussions on this topic. Any tax increase will not affect low income families,” Khalil told a news conference at the Finance Ministry.
The parliamentary committee is expected to put the final touches on proposals to fund the salary scale on April 30 amid strong indications that the MPs will suggest that the increments be paid over a period of three to five years, a suggestion that the Union Coordination Committee has rejected.
Khalil explained that although he was not invited to these meetings, he nevertheless sent senior officials from the ministry to provide details about the government’s finances.
He stressed that the funding for the higher wages could be secured through cutting waste and improving tax collection.
“We are also mulling taxes on real estate profits and fining all the sea properties that were built illegally on government properties,” the minister said.
But Khalil gave no hint how much the proposed taxes would generate for the treasury, nor did he give any indication that the ministry would raise the VAT or increase taxes on interest rates on customer deposits.
“The package of measures proposed by the ministry came after studying its anticipated impact on the national economy and stability of the currency. The governor of the Central Bank has stressed that there is no reason to worry about the stability of the currency and that the banks should contribute just like everybody to finance the salary scale,” Khalil said.
Urging politicians not to politicize these measures, Khalil argued that the goal was to improve revenues so that the budget deficit would not exceed 9 percent of the GDP.
The minister also disclosed that Lebanon’s public debt had reached $64.98 billion through February, 59.4 percent of which is in local currency and the remaining 40.6 percent in foreign currencies.
He said the cost-of-living wage increase enacted in 2012 had contributed to the budget deficit rising to 9 percent of the GDP.
“The salary adjustment caused the cost of civil servant salaries to rise by 22 percent, while allocations to Electricite du Liban jump by 30 percent,” Khalil explained.
He emphasized that 85 percent of EDL’s losses were due to the high cost of fuel oil.
“Removing the problem in the electricity sector alone would reduce the budget deficit by half, and this goal is attainable. We will discuss this issue with the Energy Ministry to reach this target,” he said.
Khalil also commented on the ongoing efforts to complete the 2014 budget before the expiration of the constitutional deadline.
“We are working at a very fast pace to complete the budget, but we need first to accomplish the breakdown of 2012 accounts because this is a constitutional requirement,” the minister said.
No Lebanese government has completed a budget since 2005, garnering sharp criticism from international rating agencies.
Khalil also suggested there might be irregularities in the Finance Ministry’s real estate department, but insisted that he would remove political immunity from any person involved in suspicious deals.
He promised to send experts to reappraise properties that have already been assessed by clerks from the real estate department.
The ministry’s real estate department has been plagued by years of complaints about rampant corruption and bribes.
He also projected GDP growth in 2014 at around 1.5 percent to a maximum of 2 percent, depending on the political and economic developments in the country.