Floating wiithout an official budget since 2005: salaries of Lebanese civil servants to 'dry up soon'
The Finance Ministry said Wednesday that the treasury has money to pay the salaries of civil servants for only two months, and any additional funds requires the opening of new allocations by the Cabinet and Parliament.
“The Cabinet last month transferred the reserve money held at the Central Bank to the treasury under Article 13, which authorizes the Finance Ministry to use this money to pay the salaries of civil servants without the need to wait for the approval of the 2014 draft budget,” a senior official at the Finance Ministry told The Daily Star.
“But this money will soon run out and this means that the treasury will not be able to pay salaries in October unless Parliament approves the 2014 draft budget or authorizes the government to open new allocations to cover the state’s needs until the end of the year,” the official said.
He estimated the reserve at around $800 million, warning that this cash will soon dry out at the current pace of spending.
The salaries of civil servants and military personnel, along with end of service benefits for retired employees, cost the treasury more than $4 billion each year, making it the second largest spending item after the cost of debt servicing.
The official said that some lawmakers are refusing to open new allocations to the treasury unless the Finance Ministry retroactively approves the extra-budgetary spending of previous governments.
Lebanon’s Parliament has not approved a budget since 2005. Governments since then are required by law to adhere to the level of spending approved in 2005, but have been unable to do so as a result of mounting costs.
Some lawmakers have demanded that the Parliament apply the same legal and legislative criteria to the spending of previous governments as it does to current requests for extra-budgetary spending.
The Cabinet needs to secure a quorum in Parliament to pass the draft budget or approve extra budgetary spending, and this scenario is not available for the time being.
The official added that the finance minister is still determined to abide by the official budget and not willing to make any compromises in order to secure additional funds for the salaries of civil servants.
MP Ghazi Youssef admitted earlier that the Finance Ministry has enough money to pay the salaries of civil servants for only two more months, expressing fear that the situation will become more complicated if lawmakers fail to reach a formula in Parliament to end this crisis.
But some observers argue that Lebanon is a country of compromises and sooner or later the politicians will sit together and make mutual concessions in a bid to keep paying the salaries of civil servants.
- Deflation shocks in emerging markets and the GCC currency peg
- Crashing oil: has the time come for GCC countries to tax their citizens?
- Moody indeed: how did Moody's rate the ME's banks for 2015?
- The Middle East's Switzerland? Lebanon's banking secrecy is here to stay
- Precious retirement: why UAE expats are moving their pensions out of the UK