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After an 8 month delay, the Council of Ministers finally ratified the 2009 Budget, on Friday June 12th 2009. The circumstances were very positive which lead to overpass the differences related to the Council of the South's Budget and how to run its expenditures. More than 60 billion L.L. were allocated for the Council of the South and the monitoring mechanisms are set to be determined later. These mechanisms will be run by the government’s Presidency.
Thus the Council of Ministers turned the page on the governmental ratification leaving the final stage for the MPs who should turn the project into a law. Differences concerning the past years’ Budgets (2006-2007-2008) still exist.
March 12th/2009- A preliminary deal to ratify the budget
The Parliament Speaker Nabih Birri and the Prime Minister Fouad El-siniora reached a preliminary deal which could end the deadlock of the 2009 budget. The media reports mentioned that the Council Of The South issue should be resolved shortly.
January 20th/2009- Update to the Budget Section
Please check the updates to the budget section of the LBP website
January 12th/2009- LBP Comments on the National Budget for 2009
After the consultations that Finance Minister Mohammad Chatah conducted with the Ministers who submitted budgets about how to adjust the public expenditures, he revealed the new project for the 2009 budget. The project is coherent with the last political developments and doesn’t take in consideration the privatization of the mobile telecommunication sector, the operation that was a basic element in the former proposal in terms of lowering the public debt.
The cancelation of the privatization is considered as the main development in the new project, and it was inevitable after Prime Minister Fouad el Siniora said that it’s impossible to sell the two operational licenses during this fiscal year.
And the main points noticed in this new proposal are as follows:
1- The increase of the public debt service to the whole expenditures ratio to 39%. And between the two projects the debt increased by 1.37 billion USD, after reaching 47.12 billion USD in 2008. And while expecting that the GDP growth will be 3% (and not 5% as expected in the old project) the debt GDP ratio will probably exceed 170%.
2- The new project was amended taking in consideration the developments in the world financial markets and the economic crisis. The price of the oil barrel is expected to be 50 USD, about 100% less than the assessment in the old project. This should have very positive impacts on the budget’s expenditures, and especially on the item concerning the transactions to Electricite Du Liban, which the Ministry of Finance says exhausted the treasury. This factor could have a role in lowering the deficit/expenditures ratio to 28.37% in comparison with 35.5% in the old project, but this ratio is still higher than the 27.07% registered in the 2008 budget.
In general the public debt services added to the wages expenditures and to the transactions to EDL represent 82% of the overall expenditures proposed in the new project. This is considered as a continuation of the real defect which the real economy endures on the level of public projects and the government’s investments.
While the expectations are that Lebanon will be relatively secure from the impacts of the economic crisis and the global recession, it’s essential to exploit this period through economic policies that stimulate growth to create jobs and stimulate demand and thus move to another level of development. The traditional burdens still tie the governmental efforts on both the financial and economic levels. The problem still lies in the absence of real economic plans to eliminate these burdens. The government and the Ministry of Finance still are not producing an economic program, which can be reflected in the budget, and that leads to the rotation of the macroeconomic policies in an empty circle related to the dilemma of how to assure the requirements using the available incomes, and thus determining the amount of borrowing needed.
December 22th/2008- A Big Thank You from The Lebanon Budget Project and Citizen Lebanon
On Behalf of the Lebanon Budget Project and Citizen Lebanon we would like to thank Aie Serve, AUB Social Activism Club and AUB Students who attended our Advocacy Training Workshop. Your Participation and hospitality helped make our workshop a big success.
December 20th/2008- Advocacy Training Workshop
The Lebanon Budget Project in partnership with the Citizen Lebanon Project will be conducting Budget awareness raising sessions at the American University of Beirut on December 20th/2008.
If you have an organization or student club and would like to recieve training sessions on the National Budget, please contact the Lebanon Budget Project team.
December 5th/2008- Website Announcement
In the month of December the Lebanese Physical Handicapped Union's (LPHU) Lebanon Budget Project (LBP) will be constantly updating the website in order to keep you informed on all National Budget related issues. Please check the LBP wesbite for updates on news, resources and announcements on the National Budget of Lebanon.
www.leb-budget.org, your Lebanon National Budget Portal.
November 25th/2008 - LBP's letter to the Members of Parliament
The 2009 National Budget proposed by the Minister of Finance Mohammad Chatah, assumes that the public deficit will grow to 32.4%, and it is known by the principles that govern public financing, that the deficit can be healthy if it only reflects economic policies that the Ministry of Finance adopts in the budget project to achieve common good. That can be accomplished through projects and investments that rely on socio-economic criteria. And thus the public spending relying on loans, turns into a strategic instrument that takes into consideration the long term social benefits.
The 2009 National Budget proposal, in this perspective, doesn’t propose a strategic vision that the government can start to implement starting next year. This is due to the overall increase in spending will be used as public debt service, as well as covering the new and cumulative costs, that the Ministry of Finance says is imposed by the wage increase and the needs of “Electricite Du Liban”.
Your responsibility in discussing this ordinary budget, which has taken three years to produce, lies in approaching questions that create an entrance to what the discussion might be on the role of the budget. This can be very effective in the formation of the measures creating a strategic vision even in the shadow of the existing deficit.
For example, the expected revenues in the proposed budget are 6.7 billion USD, and the expenditures are 10 billion dollars, so the deficit is 3.3 billion USD, which represents 10.7% of the gross domestic product (the budget projects that it’s going to be 30.8 billion USD on PPP scale). Economic theory warns that if public deficit percentage from the GDP passes the 3% ceiling, the situation becomes critical, and in Lebanon it should be more critical, given the fact that the public debt ratio to the GDP exceeds 180%, while Economists warns that the normal ratio shouldn’t exceed 60%.
In addition to that, the continuing process of borrowing to cover the chronic deficit, without real investments in projects that has an economic output with social dimensions, is considered a borrowing without any strategic vision and does not reflect real intentions to lower the burden on the treasury an on the future generations.
And in this context we see the growing responsibility of the MP’s during the discussion of the budget project and the necessity for asking a lot of questions concerning vital issues to the life of Lebanese citizens. And in our quest to determine the malfunctioning of the public finance’s work, which is considered a social and economic orientation tool, we consider the three following points as necessary to discuss:
· The need to focus on social expenditures, which the Minister of Finance says will grow in the 2009 budget. These expenditures grew only by 0.32% in 2007, and in the proposed budget these expenditures will grow to 7 billion USD. That increase will be used to cover the daily costs of the medics in the institutions that take care of people with disabilities. This increase is bellow the one registered in 2007 (9 billion L.L.). The growth in social expenditures decreased by 22.22%.
· The biggest challenge in the public finance in Lebanon is the public debt that’s growing in brutal way, and its service will reach 4.1 billion USD next year though the projected revenues of the privatization of the cellular communication sector. And the public, as the budget project says, will be 45.7 billion USD, while no real plans concerning how to reduce it really exist.
· The Minister of Finance promised that he will show “where the money of the Lebanese people go” by “offering figures and numbers”, but the most important issue in the monitoring operation is not just “where the money is spent”, but what are the procedures that makes that spending effective, and be considered as a real governmental measure to achieve economic policies, with real social overcomes, through the financial canal.
These proposed questions are considered a reflection of the concerns that every Lebanese citizen needs to have, because he needs to be involved in the public spending process. As for the “Lebanon Budget Project”, we consider it as one of our duties is the analysis of the public financial policies and to conclude what is the malfunction or where is the short sight in the process of crafting strategic policies. The Project asks to be a vital player with the MP’s in the context of pressuring the government to enhance its financial performance and produce an economic and social policy that does not only target the “numbers issues” and how to secure the financial obligations in the short run, but how to craft long term policies that looks seriously to reduce the public debt through enhancing the role of the public finance as an intro to the economic reform.
The cost of the public debt next year will represent 42% of the overall expenditures, and it will represent 82% of the fiscal revenues. In the 2009 budget project there isn’t any real proposals on how to lower that debt and remove its burden from the back of the Lebanese citizens.
“In order to highlight the importance of the civil society’s participation in the monitoring process on public spending and enhance transparency in proposing and discussing and ratifying the budget for its organic liaisons with the socio-economic indicators, the Lebanese Handicapped Union decided to launch the Lebanon Budget Project hoping that every citizen becomes involved in the public spending process and aware of his right to knowledge and access to information”
Sylvana Lakkis
President, Lebanese Physical Handicapped Union
Project Manager, The Lebanon Budget Project
