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Cabinet makes limited changes to austerity measures: Khalil.

Summary: In its fourth round of talks on the 2019 draft state budget Friday, the Cabinet made "limited but not substantial" changes to some articles related to austerity measures that have triggered street protests and strikes by labor unions and military veterans, Finance Minister Ali Hasan Khalil said

BEIRUT: In its fourth round of talks on the 2019 draft state budget Friday, the Cabinet made "limited but not substantial" changes to some articles related to austerity measures that have triggered street protests and strikes by labor unions and military veterans, Finance Minister Ali Hasan Khalil said. "We continued discussions and we finished studying a large part of the budget articles. There was a softening of some articles and there will be limited, but not substantial, change in some articles," Khalil told reporters after the Cabinet session chaired by Prime Minister Saad Hariri at the Grand Serail.

He did not elaborate.

Khalil said ministers also discussed the controversial issue of raising taxes on interest on banks' customer deposits from 7 to 10 percent, a day after the President of the Association of Banks in Lebanon Joseph Torbey warned the government that such a move would affect capital flows to Lebanon. "All opinions were heard and the decision on this article was postponed to the next session," Khalil said.

Among measures to generate revenues, the draft budget calls for taxes on the highest-earning individuals and companies to be raised to 25 percent and taxes on interest from banking deposits to be raised from 7 to 10 percent.

Contrary to earlier expectations that the Cabinet was determined to accelerate the budget discussions by meeting over the weekend, it was decided that the next session would be held at noon Monday at the Grand Serail.

Al Jadeed TV said in its news bulletin Friday night that the reason for canceling Sunday's Cabinet meeting was that Foreign Minister Gebran Bassil wanted to make "a provincial tour" in Lebanon that day.

It added that Hariri, who wanted intensive Cabinet sessions to finish the budget discussions quickly, was displeased with this development.

Khalil again sought to reassure public sector employees and retired military personnel over proposed cuts to their end-of-service and other social benefits, including medical and education assistance.

"No one is thinking of depriving the soldiers and other employees in public institutions of the medical services and school assistance. This is absolutely out of question," Khalil said, adding: "We also discussed yesterday [Thursday] the issue of unifying social aid."Khalil's remarks came as state institutions were paralyzed for the second day by a three-day strike called by the General Confederation of Lebanese Workers. The GCLW, the umbrella group of the country's labor force, had called the strike as a warning against any measure in the budget that might adversely workers' salaries or retirement benefits.

Also, the syndicate of Banque du Liban employees Friday began a rare two-day strike day to denounce what it called "attacks" on the Central Bank and reject any attempt to reduce employees' salaries and benefits.

In a statement, the syndicate urged all BDL staff to observe the strike, warning that the syndicate could declare an open strike if it saw no positive response to demands. "If the budget is approved as it is, along with the articles relating to BDL employees' salaries or benefits associated with their salaries, there will be an open strike starting next Monday," it said.

Also Friday, workers at Beirut's Rafik Hariri public hospital announced a general strike following a call by the GCLW.

Confederation chief Bechara Asmar told a news conference that the strike would be for all workers except those in the emergency and intensive care wards. He said that there must be "no austerity" on health care.

State employees in the southern town of Nabatieh, including those with the Litani River Authority and state telecoms company Ogero and municipal workers, had extended a strike through Friday, the state-run National News Agency reported.

The draft budget has drawn criticism in recent days because of provisions related to former military and security personnel, including a 3 percent cut to retirement wages for military men.

Veterans and other retirees blocked entrances to the BDL headquarters and the Beirut Port Tuesday to protest the proposed cut and any other measures that might harm their retirement wages and benefits.

Khalil said there would be a reassessment of public institutions and the entire situation at Beirut Port, where tax evasion and the waste of public funds are widespread, costing the cash-strapped state Treasury millions of dollars annually.

Earlier in the day, Khalil hinted at the possibility of changing controversial articles in the draft budget.

"There is nothing sacred in this budget. We might add articles or cancel others, and probably amend other articles.

"What matters is to reach a balanced budget that will restore confidence in our economy, finances and monetary stability," Khalil said, speaking at a conference organized by the Federation of Labor Unions and municipal workers in Lebanon, held in the southern city of Sidon.

He reiterated that the draft budget would not affect the salaries, wages and social benefits of military and security forces, or those with middle and limited incomes.

Defense Minister Elias Bou Saab, who along with Bassil had been embroiled with the finance minister in a spat over the budget, said after the Cabinet session: "The atmosphere is positive and there is no substantial dispute."

Friday's was the latest in a series of meetings dedicated to examining the draft budget, which seeks to reduce the deficit and generate revenues, a key demand of international donors.

The Cabinet Thursday approved 25 budget articles out of 62.

Lebanon is under growing international pressure to enact a series of key fiscal and economic reforms recommended at last year's CEDRE conference.

The reforms are deemed essential to unlock over $11 billion in grants and soft loans pledged by international donors to bolster the ailing economy, which is suffering from a soaring national debt of $85 billion, slow growth and a high budget deficit.

Last year's budget deficit was estimated at $6.7 billion, or 11 percent of gross domestic product, though the final figures have not been released.

Hezbollah's deputy head Sheikh Naim Qassem called for a draft budget that would reduce the deficit.

"During the budget discussions, we did not stage media shows because we believe that salvaging the economic and financial situation required cooperation among all the parties inside the Cabinet through a calm and constructive debate," Qassem told a Hezbollah religious ceremony south of Beirut.

"That's why we are contributing to help reach a budget based on reducing the financial deficit and stimulating the economy, in tandem with the need for good management by the government to curb waste [of public funds], corruption and tax evasion," he added.

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Publication:The Daily Star (Beirut, Lebanon)
Geographic Code:7LEBA
Date:May 4, 2019
Words:1148
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