BEIRUT: Finance Minister Ali Hasan Khalil Monday dismissed “political motives” behind his decision to block extra-budgetary spending pending the ratification of the 2014 budget and insisted that the country’s treasury was in good shape.
“First of all, let’s be very clear - the country’s monetary state is stable, the treasury is in good shape, we don’t have a liquidity crisis and therefore we can pay salaries and dues,” Khalil told reporters during a news conference at the ministry. “Contrary to the general assumption, my proposal is not politically motivated and all that we’re seeking is to legalize state expenditures.”
The minister has refused to authorize extra-budgetary spending unless the draft state budget for 2014 he prepared is approved. Khalil’s decision raised fears that the salaries of public sector employees would not be paid at the end of the month.
Khalil has argued that he could only finance ministries in need of loans within a legal framework, and at a news conference Monday, the minister said he had blocked requests by various ministers to approve loans that exceed the budgets allotted to their ministries.
“You wouldn’t believe how many problems this has created, even with ministers allied with us,” said Khalil, Speaker Nabih Berri’s top aide.
Khalil highlighted that a legal framework was needed to authorize spending: “We must legalize state spending so that we are not held accountable on a personal or a political level.”
Khalil argued the only solution was to either approve the 2014 budget or for Parliament to issue a law exclusively for this Cabinet.
Due to the fact that no state budget has been approved since 2005, Cabinets are obligated under the law to adhere to the financial ceiling of the last approved budget. Former Prime Minister Najib Mikati's government faced a similar problem but resolved the issue by approving extra-budgetary spending of LL8.9 trillion (nearly $6 billion) for 2011.
Khalil said he was not willing to follow suit.
“We shouldn’t be forced to breach the law, even if breaches have become the norm recently,” he said, adding that his proposal should not be viewed as targeting pervious finance ministers.
“It is the duty of the Finance Ministry to work on resolving the issue,” he continued. “We have made significant progress in settling owed accounts and we will transfer them to Parliament to legalize them.”
Khalil informed ministers during last week's Cabinet session of his decision and warned that approving loans to ministers via a Cabinet decision was illegal: “The issue is now in the hands of the Cabinet.”
Khalil’s detractors view his stance as “purely political,” not economic, and say it aims pressure lawmakers to revitalize the work of Parliament, which has been paralyzed in light of some MPs’ opposition to legislating in the presence of a presidential void. Lawmakers have not yet reached a consensus on a candidate to replace former President Michel Sleiman, whose six-year term ended on May 25.
Khalil said the treasury did not need the intervention of the Central Bank to settle its dues, adding that ensuring that the public sectors gets paid its salaries was a “personal battle.”
Central Bank Governor Riad Salameh said in comments Monday that funds for the public sector would continually be available, adding that he had informed politicians that the Central Bank was ready to cover those needs at all times.
Salameh said there was no liquidity crisis, vowing that the Central Bank would “cover the needs of the state in Lebanese pounds and dollars.”
Salameh explained that the budget for 2014 ensures the payment of salaries for public sector employees until September.
At a news conference, the Finance Minister slammed the state-run electricity company Electricite du Liban for blaming his ministry for its woes and urged Parliament to hold a session to grill EDL on an array of “problematic” issues.
“Those accusations are unfounded and inaccurate,” Khalil told reporters. “The government and the Finance Ministry have approved a proposal by the Energy and Water Resources Minister to fund the EDL deficit and ensure it could buy the necessary fuel oil.”