LEBANON’S 2024 STATE BUDGET FAILS TO INCLUDE REFORMS YET AGAIN

Caretaker Prime Minister Najib Mikati chaired a cabinet session on the 10th of February 2024, during which the draft state budget for the year 2024 was approved. 

This budget draft is the first in the past two decades to be ratified within the constitutional deadlines with a claimed zero deficit.

The proclaimed achievement by the caretaker government neglected to include badly needed fundamental reforms to help the state emerge from a systematic meltdown that has been adversely affecting the formal private sector for the past five years. 

The catastrophic devaluation of the Lebanese pound, high unemployment figures, a severe drop in consumer purchasing power, high inflation, public sector strikes, and mounting tension in the South of the country have not been duly addressed. 

In fact, the budget adopted a regressive tax regime omitting to note the links between expenditure and revenue parameters and the macroeconomic goals that are vital to ensure a growth trajectory. 

Articles that could have helped the formal private sector weather the collapse have been rescinded.  Articles 56 and 57, which exempt businesses from taxes on the LBP re-evaluation of assets and stocks due to the differences in the exchange rate, and Article 93 related to the cutoff date pertaining to the end of service calculations have been revoked. 

In addition to a constitutional violation relating to the absence of a cut-off date for the balance of accounts, the budget has failed to address the country’s ruptured social contract.  Social and economic reforms are overlooked, and investment in essential public services remain inadequate. 

Time is of the essence for present day Lebanon.  

It is imperative to execute an immediate implementation of comprehensive structural and legal reforms with direct impact on the state’s revenues and expenditures.  This includes customs, border control, restructuring of the public sector, unification of the exchange rate and enacting incentives for private sector growth thereby widening the tax base.