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There is a play currently unfolding in Parliament titled The Optical Illusion of a Budget. Rooted in actual events, it nevertheless retains its genre as a work of fiction — sharp and witty, yet overall quite amusing, akin to the style of Ionesco’s The Bald Soprano.
The play revolves around a 1,200-page document titled the “2024 budget proposal.” As mere spectators, we are subjected to endless and futile monologues within the Parliament, followed by ostentatious displays of strength before a group of journalists following each session of the utterly ineffective Finance Committee. This is when one can witness on-hand the show of inflating and overflowing egos.
However, over time, the recurrence of this theatrical display can become tedious, to say the least, as these sequences of 15-digit numbers weave through the entire Parliament. Meanwhile, the main stakeholders, the taxpayers, strongly object to this attempt to deplete the scant scraps of their livelihoods. Let us briefly explore the key points to better unravel the issue at hand:
– To begin with, it’s crucial not to blindly believe the narrative woven by the budget regarding expenditures ($3.34 billion at the current market exchange rate), revenues ($2.87 billion), and the deficit ($332 million). Arithmetic is not the Ministry of Finance’s forte. Even before the crisis, when there was a single exchange rate and the situation was somewhat normal, their miscalculations could reach several hundred million dollars. In addition, they would conceal the actual deficit at the end of the year through unpaid bills to various state suppliers.
– Currently, with the various exchange rates, multipliers whimsically applied to bureaucratic paperwork fees (x10, 20, 40, 120…), and not a slight visibility into the economy, the past estimation is on par with the English idiom “as good as anybody’s guess.”
– Here, a noteworthy anecdote comes to mind: one-third of the expenses were allocated to the “budget reserves.” What does this really mean? In essence, it’s a sum of money ($1.13 billion) that will be allocated based on the prevailing mood, the persistence of a weighty minister, or the egotism of yet another one, all in the absence of any overseeing authority. Currently, in a surreal turn of events, the Council of Ministers is allocating funds to several ministries from the reserves of the 2023 budget. The irony is that the latter has never been adopted or discussed. In fact, it does not even exist…
– We now touch upon the part that concerns each and every unlucky one of you. Essentially, to achieve this minor (in theory) deficit, taxes are outpouring. We shall refrain from delving into the intricate details. Economic organizations and associations have compiled an extensive list and are expressing their outrage: how can any sound-minded authority endorse such a burdensome tax plan amidst a deteriorating economy, rampant tax evasion at 50%, deposits trapped in banks, nonexistent reforms, a poverty rate of 80%, low investments, and an official stranglehold on public funds?
– Let’s add here the income generated without any corresponding services provided to the public in return. Essentially, these revenues serve no relevant purpose other than to compensate the civil servants collecting them, keeping in mind that, in fact, these public employees are not really working. In actuality, their salaries are so modest that they may be tempted to impose a raise on their employers. Yet again, the funds for such raises are not accounted for in the budget proposal.
– An indicator of the prevailing times — another unparalleled odd phenomenon — is the casual announcement of workdays by government employees, not strike days. As an example: “For real estate transactions, services will be temporarily available on Tuesdays and Thursdays next month…”
– At this time, the parliamentary Finance Committee is actively seeking to negotiate potential amendments with the minister. Soon enough, they will realize that the minister of finance, much like other ministers, has a limited grasp of the content, as the text was drafted by Saadeh Chami.
– What comes next? Either Parliament amends the budget proposal by lowering taxes (assuming the quorum can be ensured, which is a tricky issue in and of itself) or, if this doesn’t materialize before the end of January, the government can publish it by decree. In either case, we’ll face a (significant or minor) deficit, with uncertainty on how to address this shortfall. As long as Mansouri insists on keeping a tight fist on the cash flow, neither the option of seeking oversea funds, ever since the 2020 default, nor that of Parliament paying in Lebanese pounds are possible.
– As per well-known practice, the government, which is unable to govern, finds itself in an inextricable deadlock. Naturally, one could have theoretically explored other out-of-the-box alternatives: opt for more equitable taxation, introduce non-tax revenues, engage in privatizations, cut the workforce, or go bold and stop the looting… Better yet, work extensively on improving our leaders’ IQ.
In substance, trying to enlighten a corrupt official is like mending a broken pot: sooner or later, it will spill over.
nicolas.sbeih@icibeyrouth.com
