Cabinet set to review austere budget draft

Infrastructural investments need private sector

The Ministry of Finance (MoF) is expected to submit the 2013 budget draft to Cabinet within this week. The draft will exclude new investment expenditures or significant tax increases. It will be similar to the budget prepared for 2012 which set spending at around $12 billion, and revenues at $8 billion.

“The Cabinet said it intends to rely on the private sector, as well as on loans and grants from foreign funds for infrastructural investments,” said Fouad Zmokhol, Head of the Association of Lebanese Businessmen (RDCL). He said the Cabinet had also pledged to submit the Public-Private-Partnership (PPP) law to Parliament soon.

The PPP law will allow the government to initiate much-needed infrastructural projects. Ziad Hayek, Secretary General of the Higher Council for Privatization, said the law will facilitate the private sector's involvement in public projects: “The PPP will allow the government to buy energy from private firms which would bear all construction costs.” The law sets guidelines for ensuring the transparency of the tendering process in public sector projects, and drafting contracts for these projects. Hayek said the Cabinet will likely adopt the PPP law soon, as only a few ministers have voiced their disapproval.

The 2013 budget draft does not comprise the controversial salary scale for public sector employees. It only includes around $530 million covering cost-of-living payment increases paid by the MoF to public employees since 2012. If adopted, the new salary scale, estimated by the MoF to cost $660 million yearly, will be funded through extra-budgetary sources such as increasing the investment coefficient of buildings. The Cabinet intends to pass the new salary scale draft along with reformative measures to increase the efficiency of civil service and proposals for reducing its cost. One proposal calls for distinguishing between salary scales of employees in different categories (civil servants, educational staff, military staff, and others). “This way the State will not have to pay raises to all its employees whenever it rectifies the wages of employees in one category,” said Zmokhol.

In its current form, the salary scale draft is marred by discrepancies, including gaps between salaries of employees. For instance it raises end-of-service indemnities for military staff by 40 percent and sets salaries of public schoolteachers between $600 and $3,300, with a monthly retirement salary of $2,600.

The Cabinet is scheduled to discuss the funding of the salary scale on Tuesday (February 19). Once a plan is approved, the scale will be referred to the Parliament. Zmokhol said the salary scale issue might not go as smoothly as the Cabinet had planned: “We (as economic bodies) are concerned that the Parliament might move to ratify the scale without its associated reforms ahead of this year's anticipated elections.”