Lebanon News

Lebanon Cabinet refers state budget to upcoming session

President Michel Aoun (R) and Prime Minister Saad Hariri (L) during a Cabinet session at the Baabda Palace, Wednesday, Feb. 8, 2017. (The Daily Star/Dalati&Nohra, HO)

BEIRUT: Lebanon’s Cabinet Wednesday referred discussions on the 2017 draft budget to next week, as ministers appeared adamant to conclude talks on the matter.

"Next Wednesday's session will go over the budget and if the Cabinet has a [full] agenda, then we'll hold another session on Thursday," Finance Minister Ali Hasan Khalil told reporters after a Cabinet meeting chaired by President Michel Aoun at Baabda Palace.

The Cabinet will hold "consecutive sessions ... to approve a state budget," Education Minister Marwan Hamadeh said.

Lebanon has been without an official budget since 2005 due to a series of security incidents and deep divisions among the main political parties. The absence of a budget has led to millions of dollars in uncontrolled extra-budgetary spending.

Khalil had said ahead of Wednesday’s Cabinet session that he would present the budget proposal and would be open to discussions on the matter.

His draft budget calls for a series of new taxes to finance a higher salary scale for civil servants, a demand spearheaded by Parliament Speaker Nabih Berri and backed by teachers’ unions.

Among the proposals are increases to the value added tax from the current 10 to 11 percent, increasing taxes on interest rates on customer deposits from 5 to 7 percent, increasing taxes on corporate profits from 15 to 17 percent, and slapping a 15 percent tax on real estate transactions.

However, differences within the Cabinet and in Parliament over the wage hike bill for civil servants and demands by key blocs - mainly Aoun’s parliamentary Change and Reform bloc - for an audit of $11 billion in extra-budgetary spending by former Prime Minister Fouad Siniora’s government between 2005 and 2009, might hinder the ratification of the draft state in Parliament.

The approval of the 2017 draft state budget is seen as crucial for controlling state finances and improving the battered economy, burdened by more than $74 billion in public debts.

President Michel Aoun and Prime Minister Saad Hariri met behind closed doors at the Baabda Palace ahead of the meeting.

- Refugees to return to safe zones -

Aoun also reiterated calls on the international community to establish safe zones for Syrian so that refugees could return to their homeland, although conceding that it would be difficult to carry out.

"I believe that [agreeing] on such a matter would be difficult,” he said, citing differing opinions on whether the safe zone should be supervised by the United Nations or local authorities.

"[Lebanon] bears huge burdens due to the refugee influx,” he said, pointing out that foreign officials visiting Lebanon have acknowledged the "size of this problem ... but no concrete measures have been taken to resolve [the crisis]."

Meanwhile, Hariri warned that Lebanon was "becoming a camp for refugees," urging international community to include the whole country in aid packages, not just certain areas.

He said the government was discussing with State Minister for refugees Mouin Merehbi the prospects of aid received by Lebanon in this regard, calling on ministers to cooperate to determine the "crucial projects."

Lebanon is currently hosting 1.03 million Syrians registered with the UNHCR, though the Lebanese government estimated numbers might be closer to 1.5 million.

- Strengthening diplomatic ties -

Separately, Aoun said that he will pay an official visit to Egypt and Jordan next week to strengthen ties with the two Arab countries. The diplomatic trip follows a tour of Saudi Arabia and Qatar that improved relations between Lebanon and the Gulf countries.

Hariri told ministers that a Lebanese-Saudi commission would be formed to follow up on matters of mutual interest for Lebanon and Saudi Arabia.

He said that agreements with the Gulf country should be reactivated, particularly those concerning the economy.

 

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