BEIRUT ( Associated Press) – Lebanon’s government met on Monday for the first time in more than three months on a budget as talks with the International Monetary Fund about the country’s economic slowdown were about to resume.
The developments were intended to contain the worst economic crisis in Lebanese history. After ending the boycott of the powerful Hezbollah and its main Shiite ally, a cabinet meeting was held in the presidential palace and were set to participate in the design of a recovery plan.
The draft budget for 2022 is expected to propose an increase in taxes and fees in a country struggling to combat rising poverty levels and hyperinflation.
It also projects spending of more than £49 trillion, while revenues exceed £39 trillion, a decrease of about 21%. Critics say the deficit will be covered by money printing, leading to the Lebanese pound which has lost more than 90% of its value over the past two years and will lose more in the coming months.
It is not clear what exchange rate the government will use for the budget as there are multiple rates across the country. The official rate is still £1,500 for the US dollar while the black market rate is around £23,000. There are several other rates used for the withdrawal of bank deposits.
Lebanese economist Aaliyah Moubayd described the draft budget as “deadly and dangerous”, with problems ranging from the use of multiple exchange rates to indirectly legalizing the transfer of foreign currency deposits to the Lebanese pound. What is of concern, he tweeted, is the government’s failure or refusal to recognize the “devastating” economic and social situation as a result of decades of corruption and mismanagement by the Lebanese political class.
Lebanon’s economic crisis has been described by the World Bank as one of the worst in the world since the 1850s. The recession has left three-quarters of the 6 million people in poverty, including one million Syrian refugees.
The government is expected to discuss the draft every day till Friday. If approved, it will be sent to Parliament for discussion and will require a majority to pass.
The meeting is the first since October 12, when Hezbollah and its ally, Parliament Speaker Nabih Beri’s Amal Party, called for changes to the national investigation into the devastating August 2020 explosion in the port of Beirut and effectively paralyzed the government.
Hezbollah had called for the removal of the judge investigating the port blast, accusing it of bias. Judge Tarek Bitter meanwhile faced several legal challenges and lawsuits seeking his removal, which forced him to suspend the investigation at least four times. The investigation has been stopped for the time being.
Beetar summoned and charged several senior officers with intentional negligence, which led to the explosion, which killed more than 200 people and injured thousands. The two Shia groups resolved to continue their efforts to remove the judge.