Cabinet meets at the Presidential Palace in Baabda on Thursday. (Credit: Dalati and Nohra)
BEIRUT — Prime Minister Najib Mikati’s cabinet Thursday approved the 2022 draft budget at a meeting at the Presidential Palace in Baabda. The budget still has to be discussed and then voted on in Parliament.
Here's what we know:
• Speaking at a press conference following the session Mikati said “this is the first step towards recovery, the budget is a demand from the International Monetary Fund but it is also an internal need.” “We are facing big challenges as we can’t secure foreign financing anymore like we used to, so we have to reach an IMF deal to secure foreign financing,” Mikati added.
• Mikati announced that the estimated budget deficit dropped from LL10.26 trillion to LL8 trillion. He also said that excluding the LL7 trillion set as reserve, the budget would be balanced.
• Mikati also confirmed that the Sayrafa rate will be used for the customs dollar, and every month the finance minister will announce the rate. He said that the increase in prices after the implementation of the new rate will not exceed 3 to 5 percent, and customs taxes on medication and food, as well as coffee and tea, will be removed.
• Mikati also said that discussions around electricity, telecoms and garbage collection will take place in future meetings outside of the budget.
• During the session, the cabinet decided on the limits for the monthly assistance given to public sector employees, setting them between LL2 million and LL6 million, and the monthly assistance for retired employees, which it set between LL750,000 and LL6 million. In the early text of the budget proposal, the time period for such assistance was set between Jan. 1 and Dec. 31.
• The state-run National News Agency reported President Michel Aoun as saying during the cabinet session that “it is important that the budget plan be accompanied by a financial and economic rescue plan.” Aoun also reportedly said the rescue plan should include “identifying the losses” of the banks and distributing those between “Banque du Liban, the banks and the depositors.” He added the plan should also include a restructuring of banks and essential reforms, as well as efforts to fight corruption and carry out a financial audit of BDL and public institutions.
• Aoun also asked that the funds previously allocated in the budget proposal to pay for interest on local debt and amounting to LL6.4 trillion be reallocated so that two-thirds goes to electricity and one-third towards increasing the salaries of public sector employees.
• The cabinet meeting was preceded by a one-on-one meeting between the president and Mikati.
• The cabinet had met several times since Jan. 24 to examine the draft budget, criticized by some for the new taxes it imposes when three-quarters of Lebanon’s population lives below the poverty line.
• The initial deadline for approving the draft budget was before the beginning of the current year. The adoption of a budget is crucial to unlock financial help from the International Monetary Fund.
• At a session Tuesday, the cabinet agreed to hold a session dedicated to the electricity file. An article in the original 2022 budget draft noted that Electricité du Liban would get an advance payment of LL5.25 trillion to buy fuel. Energy Minister Walid Fayad was asked to justify the advance payment, before it was decided to separate the electricity and budget plans.
• Parliament is next due to meet on Feb. 21 and 22.