Anatomy of a Lebanese Budget Crisis

As the Lebanese cabinet meets yet again to discuss the 2012 spending budget on Wednesday, an imminent solution seems unlikely.

The series of discussions involving various stakeholders over the past few days will not necessarily lead to a fruitful session for the government on Wednesday. New obstacles blocking a resolution will surely crop up between the parties making up Prime Minister Najib Mikati’s government.

The session’s agenda includes a new bill for spending an additional LL8.9 trillion (US$6 billion) and a proposal for borrowing LL4.9 trillion (US$3.3 billion) from the treasury until the end of July when the 2012 budget is expected to be approved.

Even though the legal frameworks dealing with issue have been amended to try and pass the new bill, there have been no significant changes in the political positions which still obstruct a governmental consensus. The consensus is necessary in order to ensure the needed majority in parliament that would pass the law.

This is the obstacle the suggested bill has been facing since the February 22 session, following the amendments recommended by the finance and budget committee.

Following his reservations about signing the old bill based on his authority set forth by Article 58 of the constitution, President Michel Suleiman requested that finance minister Mohammad Safadi present a revised draft of the bill at the cabinet meeting tomorrow.

Safadi says that both bills — the old bill and the revised version— are valid. They both have one goal, to find a solution to the ongoing debate over additional spending.

Explaining the difference between the two bills, the minister says, “the new draft is about the actual spending in 2011. The old bill was prepared months ago based on projected expenses.”

Yet there is a veritable worry that neither version of the bill will pass based on the following factors:

1- The government’s inability convince a majority to approve the new bill for the additional expenses. The bill will be presented by the ministers of Walid Jumblatt’s Progressive Socialist Party (PSP).

The old bill could not get enough votes due to the lack of a parliamentary majority and the fragmentation of the ruling majority around the issue when Jumblatt refused to support the bill without sanctioning an additional US$16 billion (US$11 billion between 2006 and 2009 + US$5 billion in 2010).

Jumblatt insists on the survival of the Mikati government, his participation therein, and ensuring the majority does not break up. But he took a contradictory position in parliament when the previous bill reached parliament.

2- March 8 ministers’ continued support for the old bill. They want the president to pass it based on Article 58, even if it means ignoring the amendments suggested by the finance and budget committee.

Suleiman refuses to sign based on the following counter-argument. The finance and budget committee made amendments to the old bill to clean it up of what they considered constitutional violations.

Thus, he now does not have the authority to pass it since it is — with the amendments — a completely different law whereby Article 58 does not apply.

3- Safadi’s belief that the problem is political more than financial. As finance minister, he proposed practical solutions to find suitable resolutions for the crisis. He will not participate in the debate among the parties of Mikati’s government about Article 58 and believes that the conflict is in the interpretation of the constitution.

“We prepared everything requested by the finance and budget committee. They asked for balance sheets, even if they are unaudited, so we provided them with those from 2006 to 2010 after they were approved by the council of ministers,” he remarks.

“We told the finance and budget committee that the balance sheets were not audited. We did everything we were asked to do. We have two bills in the parliament. One is suitable and the other might work. We have nothing else,” Safadi explains.

Safadi expects that the council of ministers to address the 2012 budget bill in the middle of next week. It will be discussed and possibly approved in July.

This article is an edited translation from the Arabic Edition.