BEIRUT: Finance Minister Ali Hassan Khalil Thursday reiterated his position that salaries of civil servants and military personnel will not be paid end of this month if Cabinet and Parliament failed to approve extra-budgetary spending.
Speaking to MTV station, the minister said he was not willing to pay the salaries of the civil servants this month if the extra-budgetary spending is not passed by Parliament, brushing aside some accusations that his position is politically motivated.
“I am not going to repeat the practices of the former finance ministers. I am not going to spend more money if I don’t have a law in my hand which authorizes me to pay the salaries of the civil servants,” Khalil stressed, expressing regret that the employees have to pay the price.
“At present, there is no law that allows the Finance Ministry to pay the salaries of government employees. This means that no salaries will be paid this month if the extra-budgetary spending is not approved by the Parliament,” an adviser to the minister told The Daily Star.
But most lawmakers from March 14 dismissed Khalil’s decision as nothing more than political pressure to encourage Parliament to convene and discuss all pending political and economic issues.
However, some of the lawmakers admitted that the Finance Ministry may have a serious problem paying the salaries in September because in that month the Ministry will truly exceed the budget.
“The Finance Ministry can still spend money and pay the salaries for July and August. But we may have a problem in September because the government would have exceeded the official ceiling and this means that the employees will not receive their salaries if the extra-budgetary spending is not passed by the Parliament.” MP Ghazi Youssef told The Daily Star.
Youssef revealed that there are currently talks between all the main political groups in the country to end the row over the salaries of government employees.
A senior official at the Finance Ministry stressed that the minister could not make any compromises on the issue. “If former Cabinets violated the law on spending this does not mean the finance minister is obliged to repeat this mistake. There must be an end to these practices.”
The Finance Ministry usually allocates LL500 billion ($333 million) each month to cover the salaries of the civil servants, military personnel and end of service benefits of government retirees.
“The salaries of the public sector employees, based on the budget, is LL6.2 trillion annually and this represent nearly a third of the budget expenditures,” the source explained.
Youssef also acknowledged that the political classes need to find a solution to some of pressing financial issues, including the salaries of government staff. “We can’t continue in this manner. We should not keep the government employees hostages in our political differences.”
But despite these warnings from Khalil, March 14 lawmakers refuse to hold a special parliamentary session until a president is elected.
Lebanon will also face another serious predicament this year if Parliaments fail to approve the issuance of new Eurobonds to finance the cost of debt servicing and all the government’s urgent needs.
“The Eurobond is a foreign currency denominated bond and for this reason the Central Bank can’t execute any new transaction unless it gets an authorization from the finance minister, and the ministry can’t authorize spending until Parliament approves the new bond,” Khalil’s adviser said.
All sides agreed, however, that the government and the Central Bank don’t have a cash flow problem but say the extra cash in the coffers of the Central Bank cannot be spent unless there is a law that authorizes it.
Bankers emphasized that the state has met all its bond needs this year, noting the government still needs approval from Parliament to issue another $500 million in Eurobonds.
Observers said this is one of the worst political crises that Lebanon has ever passed through in decades, noting that even during the peak of the Civil War, governments at the time always paid their dues.