Lebanon's Cabinet, headed by caretaker Prime Minister Najib Mikati (C), meets at the Grand Serail, Aug. 16, 2023. (Credit: Hassan Assal)
BEIRUT — Najib Mikati's caretaker government on Wednesday approved the preliminary draft of the 2023 budget, which had been prepared by the Finance Ministry.
Cabinet began examining the text on July 24. The text, which has now become a draft budget or finance law, organizes state expenditure and revenue for the current year.
The Finance Ministry will finalize it in the next few days before sending it to Parliament, where the parliamentary committees will first study it — and possibly amend it — before putting it to the plenary assembly's vote.
The budget will come into force once it is published in the Official Gazette.
Following Wednesday's meeting, caretaker Information Minister Ziad Makari indicated that the projected deficit was revised upwards to 23.57 percent (of total public expenditure), compared with 18.79 percent in the preliminary draft, without, however, explaining the reasons for the increase.
The minister also announced that the caretaker cabinet is expected to begin examining next year's draft budget "at the end of August."
The process of voting on the 2023 budget should have been completed by Jan., the latest, but faced delays amid broader political deadlock in Lebanon.
According to Makari, the ministers approved two items on Cabinet's agenda for Wednesday. The first was the examination of a bill granting the government the right to "legislate in the customs field." While the constitution reserves this power for Parliament, the latter passed a law in 2018 delegating it to Cabinet for five years (Law no. 93 of Oct. 10, 2018). The bill referred to by the minister appears to seek to renew this authorization.
The second approved item aims to open up an LL10 trillion line of credit in the reserves of the 2023 budget even before its adoption.
Towards a modification of the Code of Money and Credit?
At the beginning of Cabinet's meeting, Mikati claimed to have consulted the report on the forensic audit of the Banque du Liban carried out by the firm Alvarez & Marsal, the contents of which leaked to the press last week.
This audit was aimed at tracing the origin of transactions recorded in the institution's balance sheet in order to detect possible fraud. In particular, it revealed a number of irregularities in the way former BDL governor Riad Salameh managed the institution, which he headed since 1993.
Acknowledging these irregularities, Mikati called on caretaker Finance Minister Youssef Khalil and caretaker Justice Minister Henri Khoury to "propose the required measures and essential steps to be taken regarding the non-compliance with accounting standards" found. He also indicated that he had "asked the Finance Ministry to work immediately to remedy these irregularities."
Mikati added that "the Code of Money and Credit, introduced in 1964, should be reviewed," a demand also put forward by Alvarez & Marsal.
"I am about to form a committee and invite it to a meeting at the Grand Serail to give it guidelines before it begins its work," he added, noting that the meeting should be held "within the next two days."
The committee will be made up of two former justice ministers, Ibrahim Najjar, Chakib Cortbawi; banking and finance lawyer Nasri Diabb; the Secretary General of the Special Investigation Commission, Abdel Hafiz Mansour; and Hassan Saleh, Chief Operating Officer of Bank Audi.
Finally, Mikati expressed the hope that Parliament, which will hold a legislative session on Thursday, will adopt the draft reforms prepared by the government and which are required as part of the country's recovery plan and recommended by the International Monetary Fund.
The Kahaleh incident
Returning to last week's deadly Kahaleh incident, Mikati praised "the measures taken by the army to control the situation."
"To those who question the absence of the state and the government in view of what happened, we say: the state is present through its institutions, its army and its security forces. It will not recover without collective cooperation and support," he continued.
Armed clashes broke out on Aug. 9 between Hezbollah members and residents of Kahaleh, after a Hezbollah-owned truck carrying ammunition overturned on a local highway. The clashes left two dead.
Thirteen ministers attended Wednesday's government meeting.
Ministers close to the Free Patriotic Movement (FPM) Abdallah Bou Habib, Maurice Slim and Walid Fayad, as usual, were absent from the meeting, protesting what they see as Mikati assuming some presidential powers amid Lebanon's presidential vacuum. Former head of state Michel Aoun left office on Oct. 31 with no successor in place.
Meanwhile, a video circulating on social networks showed caretaker Agriculture Minister, Abbas Hajj Hassan, arriving at the Grand Serail with bags full of wheat.
"Our food security will remain destabilized as long as we don't plant any," he told journalists.