Any household provider or anyone overseeing day-to-day expenses can fully comprehend that addressing the financial deficit requires either reducing expenditures or increasing revenues. Unfortunately, the Lebanese government, overshadowed by some of its members’ arrogance and defiance, erroneously believes that the budget that was drafted can be a lifeline for the economic situation, simply because the figures were inflated and the deficit was wiped out.
Going back to the core issue will lead us to the sources of the economic crisis and the intervention of the International Monetary Fund (IMF) to steer the country towards economic stability. One of the main conditions of this intervention was the urgent need to eliminate the budget deficit. This measure was deemed necessary to secure the fiscal integrity of the state, allowing it to fulfill its obligations independently, without resorting to external borrowing or relying on the Lebanese Central Bank (BDL) for additional financial support. Consequently, this would prevent a renewed tapping into depositors’ funds.
The sole aspect related to both this issue and the reform package that the current government seems to have focused on is reducing the deficit. As such, it decided to draft a budget fraught with a wide range of increases without conducting a proper assessment of their impact on investments. The outcome was a budget that technically showed a zero deficit but is riddled with numerous violations and encroachments on the fundamental rights of the citizens.
These increases include a significant rise in fees (at times by tenfold) within some government departments and a request to impose taxes on those getting money from outside Lebanon. Not to mention various irrational measures endorsed by a state that previously failed to honor the deposits of its citizens and is now usurping the salaries they are earning overseas.
However, the core of the issue goes beyond merely eliminating the deficit. Assuming that the latter is currently at zero percent and the government has not achieved corresponding economic growth, how will it secure new funds for investments and diverse projects that serve the public interest and contribute to improving the citizens’ living conditions?
The real issue lies elsewhere. In fact, the government has turned a blind eye to all the outstanding conditions stipulated by the IMF and has only opted to implement deficit reduction. Thus, even if we succeed in eliminating the deficit, the challenge of a public sector that has become a burden due to an overcharge of misplaced public servants remains unchanged. There has been no concerted effort to streamline sectors and alleviate fiscal burdens, despite it being one of the significant contributors to state expenditures with comparatively lower productivity.
Is it relevant to delve into discussions about an economic plan when the state has yet to articulate its vision for the broader economic landscape? Fundamental questions linger: are we steering towards an extractive or a productive economy? Do we aspire to bolster our industrial, agricultural, and service sectors? Is our immediate goal to position ourselves as a nation skilled in competitive spheres across diverse sectors of production?
While worldwide, countries establish a vision for the future, chart a course for the next 5, 10, or 20 years, and diligently work towards realizing these aspirations, Lebanon, unfortunately, is oblivious to this long-term perspective. Due to the ongoing upheavals that the country has to face on a regular basis, strategic planning has become somewhat of a minor priority.
Furthermore, assuming that we manage to remove the deficit and achieve minimal growth, what actions have been taken to fight illegal trafficking, for example, or even control customs loopholes? Additionally, what steps have been implemented by the government to oversee underperforming state institutions due to diverging political interests?
Let’s go as far as also assuming that not only can we eliminate the deficit, but that we can also outpace the combined accomplishments of all countries put together and achieve unprecedented growth. As long as the expenditures linger erratically across all sectors, the solution won't emerge through imposing a myriad of taxes or creating a convoluted budget. The core issue lies in the lack of prospects among budget planners, and definitely not in the need to remove the deficit.
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