A Return to Orthodoxy

What measures is the Ministry of Finance taking to reduce the country’s escalating public debt?

The public debt figure is currently USD80 billion. The effort to reduce this is a governmental one much more than a single effort from the Ministry of Finance. However, what we are doing on our end is putting Lebanon on track in the orthodoxy of managing its public finances. My team and I have worked extremely hard to produce public accounts for Lebanon from 1993 to 2018, and we are nearly done. We have a 2017 budget, and the government is finalizing the 2018 budget now. The main issue will be keeping the deficit under control. This is difficult because we see pressure on interest rates, there is a new salary and wage bill, and the price of oil is rising. We are also creating more confidence in the system. There is a significant level of confidence when it comes to Lebanon meeting its obligations. We have a long history of that and are proud of it. On the other hand, we are also working on securing enough liquidity, creating the required buffers in the banking system, making Lebanon more attractive, and helping our counterparts in the world deal with Lebanon. This includes legislation on tax transparency and fighting money laundering, among other illegal activities. All these were put in place by the ministry over the last two years, including a levy of banking secrecy on non-residents. Lebanon has moved from a non-compliant situation to being largely compliant when it comes to OECD assessments. Apart from that, there are the usual services being developed; however, those are details that allow citizens, taxpayers, and others who deal with the public sector to do so in a smoother way.

The Minister of Finance has announced that Lebanon cannot request donor funding unless the 2018 budget is approved. Why is that?

There are two points to be discussed here. The first is that Lebanon does not need to rely on international donor conferences; however, there is a major opportunity coming up and we have to make the best of it, particularly knowing it is difficult for us to find funding at the right cost for our developmental agenda, which will help the world cope with the Syrian refugee crisis. If Lebanon had not done so much to assist Syrian refugees, this would have become a much more global issue. Therefore, it is only fair that Lebanon receives the proper support for providing this global public good. We are seeking concessions on projects in our development agenda. Because of our efforts and everything we have been through; the world’s attention is extremely welcome; we are thankful to the French government for initiating the conference. The reason we need our 2018 budget in place is credibility, because the conference will talk to investors. Being able to continue to produce a national budget on a yearly basis according to our own constitution is extremely important. This shows that our institutions work properly, and that public money is used in an appropriate manner and under clear rules. This is not a condition set by investors; however, it is the least we can do to inspire interest and confidence in investors.

What are the Ministry of Finance’s specific objectives for 2018?

2018 will be a competitive year because of exogenous factors; however, one of the new projects the ministry is working on is petroleum. We have finalized the tax petroleum environment and everything related to it. We are working on having a proper sovereign wealth fund when the time comes and all the other legislation that is needed. We are also working on returning to orthodoxy in public finance. For this, we have the financial accounts and the budget. We are working on defining the new wave of reforms now that we have worked on revenue and the government has committed to not increasing the burden any further in 2018. We have to find the right measures when it comes to expenditure.