Caretaker Minister of Finance Youssef Khalil responded to criticism of the budget bill for fiscal 2024, assuring that it “continues on the path of recovery.”
In a statement released on Monday, Khalil defended his point of view and the bill. He noted that the draft 2024 budget aims to guarantee the necessary appropriations to facilitate the work of public administrations, believing that it is no longer permissible to continue spending on a provisional twelfth basis from the 2022 budget, which no longer corresponds to current needs.
Moreover, self-financing without a deficit requires the intervention of the Banque du Liban and leads to the depletion of reserves, which threatens financial and monetary stability. In this context, he recalled that the State is financed by increasing revenues, adapting to the prevailing exchange rate, and activating tax compliance, without increasing the tax burden on citizens, as some claim. He also pointed out that the tax burden has fallen from 16% of gross domestic product (GDP) to around 4%, by 2022, according to statistics, reflecting the negative impact of inflation, exchange rate differences and the extent of tax non-compliance.
He also asserted that the draft 2024 budget is part of the government’s recovery plan, which continues the path of recovery begun with the approval of the 2022 budget and the measures approved by the public finances, which have led to financial and exchange rate stability while curbing inflation and the deterioration in citizens’ living conditions.
Khalil reiterated that over the past two years, despite all the obstacles, challenges and unfavorable political circumstances, his ministry has endeavored to finance the public sector, secure public services, and achieve financial equilibrium, thereby stimulating monetary stability and re-establishing the path to recovery and progress. However, he insisted, “this stability remains neither guaranteed nor sustainable, especially in the current security and regional conditions, if the recovery does not continue.”
He also pointed out that adjusting fees and taxes to inflation rates, and correcting the imbalance resulting from exchange rate differences, serve the public interest and help sustain financial and monetary stability. Failing to do so, he argued, means wasting public money, which threatens the entity and sustainability of state institutions.
He also deplored the exaggeration concerning tax increases. He recalled that the pound has lost 99% of its value against the US dollar and that the pound’s exchange rate has fallen 60 times with 265% inflation, melting the value of fees, which have become less than their cost. Moreover, most of these charges do not affect popular consumption, particularly that of families with limited incomes, as most of them are outside the consumer basket.
The Minister explained that the exaggeration is reminiscent of the phase that preceded the introduction of the increase in the customs dollar. However, he asserted, “This had no negative effect on prices and did not cause a catastrophic rise, as some had predicted, but contributed greatly to restoring financial order and ensuring monetary stability.”
Finally, Khalil confirmed that his ministry is fully prepared to accept constructive proposals and discussions that serve the general interest, far from populism and exaggeration, in order to prevent the country from falling back into the spiral of collapse. He therefore urged the relevant authorities to adopt the proposed measures, necessary to continue on the road to financial recovery.