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Before departing for his vacation on the French Riviera, caretaker Prime Minister Najib Mikati is seeking to wrap up discussions on the draft budget in the Council of Ministers. The draft is to be referred at a later stage to Parliament for revision by the Administration and Justice Committee.
If political conditions allow for a legislative session to take place, the budget would subsequently require approval in the general assembly. The 2023 draft budget is currently under discussion even when the constitutional deadline for its approval has expired a while ago and even when there are only four months remaining in the year. All previous spendings were carried out in the absence of any clear financial and accounting provisions.
There is currently an ongoing discussion regarding the most effective way to sustain state funding in order to safeguard at the very least the public sector’s salaries. However, the acting Central Bank Governor, Wassim Mansouri, remains firm on this matter, reiterating that he will not be allocating a single dollar unless it is approved in line with the roadmap he has set for the government.
The government’s plan revolves around implementing reforms in the 2023 budget draft and securing a revenue increase for the 2024 budget to be ratified in a timely manner. The plan also includes the approval of capital control measures and reforms in the banking sector to address the financial gap. Additionally, the plan could include a borrowing law, which the government is strongly advocating for. In such a scenario, the latter should adhere to a specific financial ceiling for the loan, a clear repayment timeline and a refund mechanism that is not open to debate.
Mansouri stated that neither he nor the vice governors are willing to correspond with Finance Minister Youssef Khalil, representing the Council of Ministers, in order to find solutions. He stressed that the Central Bank’s demands are very clear, and that there will be no concession in that regard, especially considering that any backtracking or tapping into reserves will undermine the current monetary stability.
Sources within the Central Bank said that if the government is truly unable to secure the funds to finance its institutions, it should tap into the remaining Special Drawing Rights (SDR) funds. And since it has not yet completed the borrowing draft law, it should have a contingency plan to secure financing.
The same sources noted that if such a contingency plan is indeed available, both the government and Parliament would have an excellent opportunity to hold swift governmental and legislative sessions to expedite capital control measures, restructure banks and address the financial gap.
