April 30, 2019
By Ellen Francis
BEIRUT (Reuters) – Lebanon’s president called on Tuesday for approval of the 2019 draft budget by the end of May in order to launch long-stalled economic reforms, though military veterans fearing pension cuts took to the streets.
Wrestling with one of the world’s heaviest public debt burdens and years of low growth, the Lebanese government has promised reforms which economists deem more pressing than ever.
But it risks public anger if it trims wages, pensions or benefits in its massive public sector bill.
There have been some protests in recent days.
“President (Michel) Aoun urged hurrying up discussions on the budget so that it is approved in parliament before the end of next month,” his office tweeted on Tuesday.
After ministers met to discuss the budget at the presidential palace, Finance Minister Ali Hassan Khalil said on television there would be daily meetings to send the budget to parliament, but no salary or pensions cuts were contemplated.
Earlier this month, he told Reuters the budget would include wide spending reductions.
As well as the bloated public sector, state finances are also strained by high debt servicing costs and hefty subsidies in the power sector. Promised reforms include starting work to reduce the deficit in the state-subsidized power sector and managing public debt to lessen its cost, as well as cutting waste and corruption.
“OUR SWEAT AND BLOOD”
Government officials from Lebanon’s rival political parties have all stressed the need to enact immediate reforms to prevent an economic crisis.
Prime Minister Saad al-Hariri has said Lebanon faces “catastrophe” if the coalition government – formed in late January after months of negotiations – does not agree what may be the most austere budget in its history.
Jason Tuvey, Middle East economist at Capital Economics, said it would be extremely difficult for politicians to agree enough austerity measures, which are deeply unpopular.
“We still think the Lebanese authorities will ultimately be forced to turn to some sort of debt restructuring,” he said.
In Tuesday’s protest, a few hundred veterans gathered in front of the central bank, the finance ministry, and Beirut port, rallying against any potential cuts to their pensions.
“This is our right, our sweat and blood,” former sergeant major Khodr Noureddine said. “Our salaries can’t even feed us for a day, there’s no school funding, no good healthcare.”
A spokesman for the protesters, retired brigadier general Ali Omar, vowed they would remain in the streets to ensure they keep their pensions. He said cuts would hit tens of thousands of people, including wounded or handicapped soldiers, and families of killed soldiers.
(Additional reporting by Issam Abdallah; Editing by Andrew Heavens, Susan Fenton and Andrew Cawthorne)