Mikati this week finds way to cure Lebanon's spending sickness

Prime Minister Najib Mikati is optimistic about finding a solution for the problem of extra-budgetary spending, which is threatening to throw the government into disarray, during Wednesday’s Cabinet session, Information Minister Walid Daouk said Sunday.

“I am optimistic about reaching a solution for the financial spending problem in Wednesday’s Cabinet session,” Daouk told The Daily Star. He said Mikati was also hopeful of ending a widening row in the Cabinet over Finance Minister Mohammad Safadi’s revised draft law that would authorize extra-budgetary spending of LL8.9 trillion (nearly $6 billion) for 2011. However, a senior political source said that any deal on the overspending row must be part of a larger package to reinvigorate the government and resolve outstanding issues such as long-overdue public appointments.

“There is a possibility for a way out for spending, but this can only be achieved if there is a package deal over the rest of the divisive issues,” the source said.

Daouk said Mikati was holding contacts with all the parties represented in the Cabinet in a bid to agree on a solution for the overspending crisis ahead of the Cabinet session scheduled to be chaired by President Michel Sleiman at the Baabda Palace. However, he refused to give details of the solution being worked out, saying: “Let’s wait for Wednesday’s Cabinet session.”

“The spending problem has paralyzed the work of the Cabinet and [state] institutions. Therefore, a solution for this problem is in the interest of everyone so that the Cabinet and the state can resume their work. We are all in the same boat,” Daouk said. “God willing, we will reach a solution for legalizing the financial spending in a correct manner during Wednesday’s Cabinet session,” he added.

In addition to the LL8.9 trillion draft law, Daouk said a proposal for giving the Finance Ministry a LL4,900 billion loan to cover some expenses of public departments in 2012 is also on the agenda of the Cabinet meeting. He denied media reports that the LL8.9 trillion draft law has been taken off the Cabinet agenda in order to facilitate a compromise over the spending problem. A similar bullish view was echoed by Environment Minister Nazem Khoury, who is close to Sleiman.

“God willing, a formula will be reached to solve the financial spending problem during Wednesday’s Cabinet session,” Khoury told The Daily Star. He said Mikati was holding contacts with the parties concerned with the spending problem, namely the ministers of Hezbollah, the Amal Movement and MP Michel Aoun’s Free Patriotic Movement, in an attempt to reach agreement on the overspending problem.

Ministerial sources said Wednesday’s session would settle the financial spending issue once and for all so that the Cabinet could continue running state affairs. According to the sources, the Cabinet will adopt one of four formulas being discussed to solve the spending problem: The LL8.9 trillion draft law, the LL4,900 billion proposal, the adoption of loans similar to what happened in 2011, and a return to the Public Account Law. However, Hezbollah’s Minister of State for Administrative Development Mohammad Fneish said the solution for the spending problem lay with Sleiman or Parliament acting to legalize the Cabinet’s expenditures. He said Mikati during last week’s Cabinet session gave the ministers one week to find a solution for legalizing government spending.

“We want a solution for the problem of legalizing the financial spending. Such a solution can be attained either through the president signing a decree authorizing Minister Safadi’s LL8.9 trillion draft law, or through a united Cabinet acting to prevent the opposition from thwarting a quorum to hold a session to legalize the financial spending,” Fneish told The Daily Star. He said this was the stance of the three allied parties in the Cabinet – Hezbollah, Amal and the FPM.

For his part, Safadi said several proposals were under discussion to solve the spending crisis. During a meeting with supporters at his home in the northern city of Tripoli, he called on the Cabinet to approve a formula to legalize spending in order to let the state fulfill its financial obligations.

“The Finance Ministry has prepared all possible proposals to solve the problem of legalizing spending. These plans are in the custody of Parliament, the Cabinet and the presidency,” Safadi said.

Mikati has warned that the continued deadlock over the controversial draft law on overspending would threaten the survival of his government. The Cabinet has not yet approved the 2012 draft state budget.

The Cabinet postponed during last week’s meeting the discussion of Safadi’s revised draft law that would authorize extra-budgetary spending of LL8.9 trillion to this week, as Sleiman and March 8 ministers stood firm on their conflicting attitudes on the issue.

The crisis in Cabinet surfaced weeks ago after Sleiman had refused to sign Safadi’s first draft law, saying it should not become law given that the Parliamentary Budget and Finance Committee has voiced several reservations concerning the proposal in its original form. The president reiterated on May 4 his refusal to sign the LL8.9 trillion draft law, saying the move was unconstitutional. But ministers of Aoun’s bloc, Hezbollah and the Amal Movement refuse to discuss Safadi’s amended draft law on the pretext that it is unconstitutional. The ministers contend that the Cabinet has sent a draft law on the LL8.9 trillion to Parliament and that the president must either sign it or withdraw it because the Cabinet cannot discuss a new law before the first draft has been withdrawn. Aoun has criticized Sleiman, blaming him for the government spending crisis after he refused to sign the LL8.9 trillion decree.

Earlier this year, MPs from the opposition March 14 coalition and MP Walid Jumblatt’s parliamentary bloc blocked the passing of Safadi’s proposal in Parliament, saying that the extra-budgetary spending by the previous Cabinets of former premiers Saad Hariri and Fouad Siniora should be settled first.

March 8 coalition ministers insist Sleiman use his constitutional prerogatives to sign the decree, as failure to reach a solution would prevent the government from meeting its financial obligations. Meanwhile, Siniora urged the government to stop procrastinating and finalize the 2012 state budget, adding that the issue of overspending can only be resolved in a comprehensive manner. “The [government] should stop wasting time and start preparing the 2012 state budget and pledge to finish it within two months,” Siniora told visitors at his office in the southern city of Sidon. “It should also propose to Parliament that the ceiling for spending in 2012 be raised, while at the same time prepare a proposal to finalize the accounts of previous years,” he added.