|Siniora prepares to receive UAE counterpart Finance minister bringing 'Paris II' cash - The Daily Star
|Finance Minister Fouad Siniora will be looking forward to receiving his counterpart from the United Arab Emirates, Mohammed Khalifah bin Kharbash, on Tuesday, who will be carrying with him details of the UAE's financial contributions pledged to Lebanon during the "Paris II" donor conference.
UAE and Kuwait's financial pledges, amounting to $600 million, are expected to arrive this week, bringing the total of the Paris cash that Lebanon has received to $950 million.
Meeting Kharbash will be a welcome respite for Siniora, who has been stuck at Parliament, while committees review the 2003 budget draft.
Siniora would like to see the Paris II cash injected into the state's coffers before the budget draft is riddled with more holes that he can plug with brainstorming sessions with MPs opposed to some of the budget's tax increases and spending cuts.
Siniora, along with Economy and Trade Minister Basil Fuleihan, had met over the weekend with Prime Minister Rafik Hariri to try and sustain the government's 2003 budget.
"A swift parliamentary approval of the budget will be the key to preserving Lebanon's credibility among international â€¦ donors who attended Paris II and offered financial pledges based on the government's program," said one economist.
When Siniora went to Paris last November and presented the government's working paper on economic reform, the budget was freshly stamped by Cabinet.
But the Monday decision by Parliament's Finance and Budget Committee to delete some of the budget's items could add a few percentage points to the deficit forecast for 2003, set at 25 percent of expenditure and much lower than the forecast of 40 percent for the 2002 fiscal year.
"I think setting the deficit at 25 percent of expenditures was a nonstarter," said economist Louis Hobeika. "The Cabinet approved this budget before going to Paris II, knowing local parties could be opposed to some of its clauses."
The Hariri government sought to appease the international community and tighten its belt by proposing, among other measures, a 25 percent deficit that proposed squeezing more money from the middle classes.
These levies, such as the proposed 5 percent tax on pensions, have drawn an angry response from labor unions. Political parties and even some of Hariri's former key allies in Parliament have rejected the more controversial clauses of the 2003 budget draft.
"I think the budget will be passed with minor changes, with a 1 or 2 percentage point increase," said economist Nassib Ghobril, the head of the research unit at Bank Saradar. "It is highly unlikely that the government would allow it to go any higher."
If the deficit goes any higher, it would scupper one element of the Paris meeting, which granted Lebanon financial pledges of $4.4 billion based on a plan that included a tight budget for 2003. "The government is trying to squeeze out money from the wrong segment of society," said Hobeika.
The Daily Star