The resurgence of monetary chaos and the rise of the exchange rate for cash transactions in informal markets to approximately 30,500 Lebanese pounds per dollar, before slightly retreating, reflects some of the repercussions of the financial crisis that the Lebanese government has created for itself by persistently delaying the provision of the required amendments to the Parliamentary Finance and Budget Committee for restructuring the draft budget for the current year. Meanwhile, it continues to approve public expenditures amounting to thousands of billions through exceptional decrees and referrals of draft laws to the Parliament. A financial official observed that the time taken to suspend the referral of the draft public budget law by the committee to the joint committees and then to the plenary session of Parliament, which has exceeded four consecutive months pending the reception of the required amendments from the Finance Ministry, is likely to extend for an indefinite period, under the pretext of entering the country into the electoral phase for the presidential elections starting from the first of September, and the potential difficulty of calling a parliamentary session next month, which usually sees the annual vacation programs of MPs inside and outside Lebanon.
Financial and banking circles fear that the expansion of public spending without equivalent resources for the public treasury will turn into a "ticking time bomb" exacerbating the existing imbalances in public finance data and its deficits on one hand, and undermining the costly efforts exerted by the central bank to curb the massive increases in the cash supply in pounds by injecting paper dollars through the banking system (cash) according to the exchange rate of the Sayrafa platform, especially after total foreign currency reserves fell below 10 billion dollars. It was not insignificant in this context that the head of the Finance and Budget Committee, MP Ibrahim Kanaan, noted that "people have had enough of talk, theorizing, and irresponsible statements. The committee completed its work on the budget issue since last April, and is waiting for clarifications from the government regarding the exchange rate criteria used in the budget and the reasons for calculating fees and taxes according to the Sayrafa rate, while salaries are calculated at the official rate (1,515 pounds per dollar). Unfortunately, we have not received enough answers, and it is the least that can be said that what we have received is insufficient."
Indeed, the committee gave the Finance Ministry a deadline until next Tuesday to reconsider the budget figures for the last time, in relation to what has been spent and what has been collected, in addition to the items requiring re-evaluation since last April. This is with confirmation, according to Kanaan, that "it cannot be said that the budget is in the Parliament while the government has not done what is required of it for months. We are ready to do what is required of us to serve the people and the public sector, including military personnel, employees, administrators, and teachers, without making them pay the price in the absence of the state, institutions, and oversight."
Aside from the internal dimension of the confusion in managing public finances, the official, in a call with "Asharq Al-Awsat," points to the dire negative impact on the final agreement promised with the International Monetary Fund. The approval of the public budget law enhanced by pivotal amendments related to determining the exchange rate is considered a prerequisite of the government commitments outlined in the initial agreement made with the international team in early April. In reality, only the required amendments to the banking secrecy system have been committed, while the preparation of the final version of the draft law for exceptional capital controls and restructuring the banking sector and auditing bank balances by an international company has also been delayed.
The heightened anxiety and spread of "uncertainty" within economic and financial circles are further compounded by the deepening ambiguities surrounding the recovery plan that the government approved before its resignation following the election of the new Parliament in mid-May. After more than a month of "verbal promises" from Prime Minister Najib Mikati and a request to disregard the proposed format, the Finance Committee has not received any written memorandum containing the updated amendments that are of utmost importance as they relate to the equitable distribution of estimated losses amounting to about 73 billion dollars, and the creation of a specific fund for compensating deposits exceeding the protection threshold of 100,000 dollars.
The head of the Finance Committee confirms that "when we asked about the recovery plan, we were informed by the Prime Minister that it would reach the Parliament modified within days, including a recovery fund for deposits. When we inquired about the banks and their restructuring, we were told that a law was being worked on. Nothing has reached us so far. Therefore, this matter is not about pleasing anyone, and there has been no talk of laws sent until now. Thus, all these matters cannot be proposed without ensuring people's rights and outlining a clear plan." Any violation of these commitments, according to the financial official, would undermine the goal of re-establishing a solid and broad political and economic base that accompanies executive authority efforts to transition Lebanon's case with the IMF from the initial agreement phase at the expert level, which was concluded in early April, to the station of presenting the agreement in its final form and its legislative attachments to the senior management of the international institution, which enables Lebanon to start benefiting from the funding program amounting to about 3 billion dollars over four years, and, most importantly, to hold the key to the flow of commitments from donor countries and regional and international institutions.
The financial official expresses astonishment at the clear contradiction in determining the methodology for dealing with such important files during three years of continuous collapses without a break. Prime Minister Mikati candidly told MPs that "every delay in approving the plan and signing with the IMF costs us a daily loss estimated at about 25 million dollars." Meanwhile, the government and the relevant ministries are slow to fulfill their "requirements." Moreover, they continue to increase public spending, while the open strike of public administration employees severely reduces tax and fee revenues for the treasury.
