BEIRUT — A vote on the 2022 draft budget went unfinished in Parliament on Friday after many MPs withdrew from the session, forcing House Speaker Nabih Berri to call a suspension due to lack of quorum.
For the second day in a row, MPs met Friday to vote on the annual state budget, which was supposed to be finalized by the end of 2021. The meeting occurred the same day as at least five bank holdups throughout Lebanon, when depositors attempted to withdraw their own money by force.
The parliamentary session was initially scheduled to start Wednesday, but was postponed until Thursday. The session is now further postponed until Sept. 26.
Lebanon's adoption of an annual budget is one of the reforms demanded by the International Monetary Fund to release a three billion dollar assistance package to a country suffering from a financial collapse that started in October 2019.
I- During the session:
-Around 4 p.m, Parliament started voting on the terms of the 2022 budget. According to Berri's press office, Parliament approved a tripling of the salaries of public employees, including retirees, security forces and contractors.
- Berri suspended the session at 5 p.m, roughly two hours after the meeting began.
- Some MPs reportedly withdrew from the session while the budget vote was taking place. MP Ghassan Hasbani (Lebanese Forces/Beirut II) told Al-Jadeed he left the session because he didn’t want to be “a false witness.” He said the basis and numbers of the draft are "chaotic," and that "no budget is better than the current budget."
- Shortly before the session was suspended, Berri said there was "an attempt" to shortchange the parliamentary quorum.
- On Thursday, MPs offered their criticisms of the draft budget. Discussions were scheduled to take place from Wednesday to Friday; however, Wednesday's session was canceled after the Lebanese Forces and Kataeb parties boycotted due to its overlap with the anniversary of Bachir Gemayel's assassination.
Following the session's suspension on Friday, MP George Adwan (LF/Chouf) told the National News Agency (NNA) that his party caused the loss of quorum.
"At the last minute, amendments and increases were made to the numbers [in the budget]. We discussed the budget without cutting accounts, and these matters are unacceptable," said Adwan. "We are ready to stay in Parliament and sleep here until a good budget with good numbers is approved, but this method of work does not respect the law".
For his part, MP Ali Hassan Khalil (Amal/South III) said he considered the walkout a "democratic right," but said Lebanese citizens are the ones harmed by the lack of budget.
Deputy Parliament Speaker Elias Bou Saab commented on the heated discussions inside Parliament on Friday.
"This is not how you discuss a budget," said Bou Saab after the session was suspended. "Those who created chaos have to know that it benefited no one." He added that he may not have voted to approve the budget draft, but was open to discussion.
"There are some rightful demands, but we will get nowhere this way," Bou Saab said.
-After the start of Friday's session, caretaker Finance Minister Youssef Khalil said that Lebanon's 2022 budget tries to imitate that of more developed countries by prioritizing health and food supply. "The difference is that the Lebanese government's resources are limited," Khalil said.
- In a statement during the session, caretaker Prime Minister Najib Mikati said that Parliament should prioritize "national [interest] over populism, and we should not stay in a state of denial." "I didn't run for the  Parliamentary elections because I knew non-populist decisions should be taken." Mikati also said that his government is already preparing the 2023 budget "but now is the time to discuss this budget," he said.
II-Key issues in the 2022 budget draft:
While several exchange rates are currently in force in Lebanon, what rate will be adopted to credibly calculate the state's annual revenues? The document that MPs are considering contains three scenarios, depending on the exchange rate adopted: LL12,000, LL14,000 or LL20,000 to the dollar.
It is not yet clear at this stage if and how the rate that will be chosen will be applied in the context of state spending, including the salaries of civil servants, who have been demanding salary increases for months.
Tax lawyer Karim Daher noted to L'Orient-Le Jour the lack of “fairness” on the tax front, as the new taxes within the 2022 draft budget, if implemented, would be applied uniformly to taxpayers of all socioeconomic levels regardless of their respective incomes. Nearly 80 percent of the population in Lebanon lives in poverty, according to the UN.
III - What is the context?
Parliament did not pass a budget for the fiscal year 2021, and the delay in passing the 2022 budget does not bode well for a potential 2023 budget, which is approaching its constitutional deadline of at most the end of January 2023.
The adoption of credible, balanced budgets is among the reforms needed to convince the IMF board to lend funds to the country as part of a multi-year recovery process, which other international donors are expected to join in later. A preliminary agreement had been signed on April 7, in which the IMF said it was ready to release $3 billion over four years to help Lebanon.
In addition to the budgets, in order to benefit from financial assistance, Beirut should reform its civil service, resolve the issue of losses accumulated by its financial system and fight more effectively against corruption. A law on banking secrecy is also part of the package deal. It was approved by the legislature at the end of July, but its content did not convince the IMF. The law has since been sent back to Parliament by President Michel Aoun for a second reading.
The budget voting session is taking place as the election period for a new president began on Aug. 31, 2022. Current President Michel Aoun's mandate expires on Oct. 31, 2022.