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Billions beyond budget

Lebanese politicians bicker over $22 billion in extra-budgetary spending

by Zak Brophy

Headlines in the Lebanese press over recent weeks have been dominated by the mudslinging between politicians over the controversy surrounding some $22 billion in extra-budgetary spending. However, while the nation’s elected leaders cynically jostle for political points, most of the Lebanese people are left none the wiser as to exactly how the country’s accounts got into such a shameful mess in the first place.

The roots of the problem stretch back to the political crisis that crippled the government in 2006, with the ensuing paralysis of Lebanon’s body politic stranding the country without a budget to this day. According to legal attorney and lecturer in constitutional law Wassim Manssouri, the country is left in a state of “continual illegality.”

The Lebanese constitution clearly lays out the process for the creation and implementation of the budget. Article 83 specifies that during its October session the parliament must discuss and vote upon the budget that has been presented by the council of ministers. However, if the nation’s lawmakers fail to reach a consensus then an extraordinary session is held lasting until the end of January.

If by the end of this session there is still no agreement, then according to article 86 of the constitution, “the council of ministers may take a decision on the basis of which a decree is issued by the president giving effect to the [budget] estimates in the form in which they were submitted to the chamber.” That is to say, the council of ministers can bypass the parliament and adopt its budget.

However, for this to be legal the budget estimates need to be submitted to the chamber at least 15 days before the session begins. As this was never done the country was left in the pitiful predicament of not having a budget.

Due to its failure to pass a general budget law the government carried on its business based on a clause in the constitution called the “provisional twelfth,” which essentially amounts to the adoption of the last legal budget. As the name suggests the “provisional” twelfth is meant to be a temporary measure but as Manssouri explains, “These provisional measures seem to have become permanent.” And so it is that in 2012 Lebanon still runs on its 2005 budget.

However, reality dictates that the government will need to spend more from one year to the next, whether it be to fund reconstruction after the 2006 war, pay increased salaries to government workers, service the national debt or subsidize Lebanon’s growing burden from imported fuel. And herein lies the controversy of the billions spent in excess of the 2005 budget from 2006 until today.

Manssouri explains, “The problem with the provisional twelfth is that normally the money needed each year is more than the year before. So what can they do to get this extra money. The government must send any new expenses to the parliament for approval.”

However, with speaker of parliament Nabih Berri declaring the cabinet as unconstitutional in November 2006 the chord of communication between the cabinet and the parliament was cut. “There was a huge political problem. Berri did not get anything from the government and they did not ask for anything. The parliament did not do anything and the government did not present anything,” says Mohammad Chamseddine, analyst at Information International.

Under the Siniora governments from 2005 to 2009 it is estimated some $11 billion was spent in excess of the 2005 budget and under the Hariri government in 2010 such spending is believed to have amounted to around $5billion. It is this money that the Mikati government now wants to see the receipts for.

The feuding is fuelled by the efforts of the current government to legalize their excess spending of around $6 billion in 2011 but not that of the previous governments. They claim they have presented their detailed accounts whilst their predecessors have not. The opposition cries foul play.

In any case, as long as the playground antics in the parliament persist Lebanon is cursed to remain without a budget. “According to article 87 of the constitution we cannot publish a new budget unless we close the accounts on the old expenses, and in order to close the accounts on the other years we need to send all of the papers to the parliament, and the audit court,” explains lawyer Manssouri, referring to the nation's financial oversight body. 

After such a prolonged period of accounting-by-whim it is highly doubtful that this gargantuan task could actually be completed. “We cannot solve this problem by a financial, legal and technical route. It would take several years to solve because it is so extremely complicated,” reasons Chamseddine.

So why the recent fever of accusations leveled by Aoun and Hariri, and their respective followers?

“Now there is mutual pressure between the March the 14th and March 8th powers so Mikati and Berri are putting pressure on Hariri and Siniora to try and influence their stance,” argues Chamseddine.

As the squabbling coterie of men that control Lebanon continue to treat the nation’s finances as a bat with which to beat each other around the face the mere talk of a budget remains a fantasy. Public institutions will continue to languish in their pitiful state of malaise, Lebanon will likely remain on the lower rungs of global transparency ratings and the Lebanese people will stumble on in dark over how their money will be spent.

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Zak Brophy

Zak Brophy was Executive's Economics and Policy Editor from 2011 until 2013.

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