Asharq Al-awsat English Middle-east and International News and Opinion from Asharq Al-awsat Newspaper

Cash Balance Deepens Lebanon’s Fiscal Accounts Gaps

Cash Balance Deepens Lebanon’s Fiscal Accounts Gaps

Saturday, 8 May, 2021 - 10:15
A boy buys bread at a shop in Beirut, Lebanon December 7, 2020. (Reuters)

Lebanon has entered the fifth month of exceptional management of the public budget, according to the twelve-month rule that allows disbursement and collection in accordance with the previous law.

Sources told Asharq Al-Awsat that the abstention of caretaker Prime Minister Hassan Diab to hold an extraordinary cabinet session would delay the approval of a new budget draft-law, which requires a decree for final referral by the Council of Ministers to Parliament.

A proposal submitted by caretaker Finance Minister Ghazi Wazni to the presidency of the government estimated the total expenditures for the current year at about LBP 18.26 thousand billion, to which an amount of LBP 1,500 billion pounds will be added to finance the electricity deficit, in exchange for estimated revenues of about LBP 14.14 thousand billion. This means that the combined estimated deficit reaches around LBP 5.6 thousand billion.

However, the abovementioned figures are based on the official rate of the Lebanese pound against the US dollar (LBP 1,507 per 1 USD), while the prevailing price in the parallel markets is more than eight times higher, close to the threshold of LBP 13,000 to the dollar.

Moreover, the project completely neglects the state’s responsibility to bear the cost of subsidizing strategic and basic materials that exceeded USD 6 billion last year, which is equivalent to about LBP 75 thousand billion at the current parallel market price.

The latest financial data reveal the extent of the severe impact that the deterioration of the national currency rate has had on the performance of the general budget, especially with regard to the fair assessment of the size of the state’s resources, which decreased theoretically by 15 percent since the outbreak of the first popular protests in November 2019 and the disclosure of the latest budget data last October.

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