|Lebanese finance minister to disclose outstanding dues (Daily Star)
|Previous government accused of failing to pay private and public sector
Finance Minister Elias Saba said on Tuesday that previous governments had failed to pay the outstanding dues to both the private and public sector, promising to disclose all details soon.
Talking to reporters at the value-added tax (VAT) building in Beirut, the minister said that the budget deficit figures for 2004 roughly stands at 29 percent of spending if the outstanding dues for that year were not included.
"But if we include the outstanding dues for the private and public sector in 2004 the deficit will reach 34 percent," Saba said. The ministry reported a low budget deficit in 2003 and 2004 following the success of Paris II conference which injected $2.5 billion in soft loans to help reduce debt servicing. Debt servicing fell considerably over the past two years thanks to the soft loans from the donor states as well as deposits of $3.6 billion from commercial banks at zero percent yields for three years.
The Finance Ministry intends to publish all the figures for the 2004 deficit in a week's time, according to Saba. The minister explained that in the past the Finance Ministry and the Central Bank calculated the budget deficit based on cash revenues and expenditures and did not include the outstanding payments for the private and public sector.
The treasury owes money for land appropriations, and to contractors, the National Social Security Fund, and municipalities. Sources told The Daily Star that the previous government either abstained from paying the full amount to the public and private sectors or paid a portion of them through the issuance of treasury bills that carried six or seven percent yields. In 2004 alone, outstanding dues amounted to more than $600 million. They added that the outstanding amount may exceed $3 billion for the rest of the years. Saba said that some of the outstanding dues date back to the 1970's.
"I will do everything in my power to pay most of the outstanding dues in 2005,"
Saba said. Asked about the government's commitments to Paris II, Saba said that the government is not against privatization and securitization. "Let's define the benefits of privatization before we proceed with this step. We cannot sell electricity for example if don't rehabilitate this sector." Privatization was a key element in former Prime Minister Rafik Hariri's economic reform program that was submitted to the donor states.
However, the sharp political differences in the Cabinet dealt a severe blow to these efforts. Saba, who was named as Finance Minister less than three months ago by Prime Minister Omar Karami, also criticized the 2005 draft budget submitted by former Finance Minister Fouad Siniora. He added that the revenues from VAT, which was introduced four years ago, reached $1.13 billion in 2004, an increase of 30 percent compared to 2003.
"We hope to submit the 2005 draft budget at the end of the month and discuss it at the next Cabinet meetings." However, the minister could not guarantee if the bill would be debated in Parliament because the country is preoccupied by the next elections in four months. Saba also disclosed that the ministry has prepared a number of reforms such as a unified treasury account, insider trading regulations, creation of public debt management policies and an offshore law for all companies. "We have a wide range of steps that will be made public soon but don't expect any miracles from us in just a few months," he said.
The Daily Star