SAWT BEIRUT INTERNATIONAL

| 2 December 2021, Thursday |

Is the cabinet planning to spend all of its funds to settle salaries?

Following the approval of an increase in transportation allowance and school grants, the government intends to provide social assistance to public sector employees. Because the cost of these increases exceeds 5,000 billion Lebanese pounds per year, spending on salaries and all other allocations will consume all current state revenues.

The cost of the proposed increase for public sector employees is approximately 5500 billion pounds per year, which includes raising the transportation allowance to 64,000 LBP per day and increasing school grants from 400,000 LBP to one million LBP annually, as well as providing half a monthly salary increase to all employees in all departments.

And, if spending on allocations, salaries and social benefits is estimated to be around 9240 billion LBP in 2021, it will rise to 14,740 billion LBP in 2022 with the increases that the government intends to grant to the public sector. Since total state revenues in 2020 amounted to 15,342 billion LBP, the state’s revenues, if no sources are secured to finance the wage increase and its annexes, will be harnessed to pay the salaries and wages of public sector employees only, leaving the state with only 600 million LBP remaining, or 26 thousand dollars on the market exchange rate, for all other spending sections such as public debt service, if the government decides to repay it, and transnational corporations. More importantly, the primary budget deficit is expected to be 7900 billion LBP in 2021.

However, if the state’s revenues rise to 18,838 billion LBP in 2021, as predicted by the Institute of International Finance, spending on salaries and other allocations will account for 70% of total revenues in 2022. It should be noted that raising the customs dollar rate, which the government relies on to finance wage increases and other relevant payments, may increase state revenues on the one hand due to increases in fees on imported goods, but it will reduce them on the other due to a decrease in commercial movement and volume of consumption as a result of commodity price increases, and thus a decrease in the state’s tax and non-tax revenues tax.

In light of the latest developments in the forensic audit process, the Banque du Liban clarified in a statement that, at the request of the Ministry of Finance, the Banque du Liban installed the logistical equipment and programs required for Marsal & Alvarez to begin operations.
On October 21, the Banque du Liban transferred the necessary information from Alvarez to the main computer in the Ministry of Finance building’s office designated for this purpose.

According to the Banque du Liban, on the 11th of this month, the Minister of Finance asked him to express his opinion on a number of clarifications required from the company regarding the information placed at its disposal, and he is currently studying these notes and providing the required clarifications in order to overcome any obstacles that might hinder “Alvarez & Marsal” from conducting its business.