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Schizophrenic policymaking

We need a courageous government to decrease taxes

by Yasser Akkaoui

When the economy slows, unemployment rises and consumption slumps, smart policymakers blow the dust off their Keynesian economics books and try to figure out which amount of government expenditure coupled with tax cuts would make optimal capital available to stimulate a prosperous cycle. Meanwhile central bankers decrease interest rates to make sure that this same capital does not end up in savings accounts. It worked in the US, Europe is getting inspired but of course our policymakers still find economics a bewildering topic.

While our successive governments have, for the most part, failed to do their jobs, to his credit, central bank Governor Riad Salameh has stepped up to the plate. The Lebanese central bank has actually done things in the past three years to incentivize economic growth. What is out of the ordinary is that Salameh’s stimulus packages that have helped the economy inch forward are Keynesian at heart.

Simply put, Salameh was ingeniously able to think beyond monetary policy into the fiscal policy sphere, thus triggering expenditure using central bank initiatives despite our dollar peg and current global interest rate environment both tying his hands. But we will need much more to continue weathering a storm that does not seem likely to blow over anytime soon. We need a courageous government to decrease taxes so that people and corporates have more capital to spend or invest.

At a time when companies are suffering and tourists are not coming in the numbers we saw five years ago, the government must allow companies to return to profitability. Companies must invest what they are earning to grow and employ while we all need to make sure that our politicians keep their hands out of our pockets, gambling with our sweat on their political agendas.   

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Yasser Akkaoui

Yasser Akkaoui is Executive's editor-in-chief.

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George Sabat (ACMA) July 26, 2015 - 9:24 AM

.NO MR. AKKAOUI, please don’t tell me that you have also fallen under the same trap, again: Finance, Finance, Finance….. Decidedly, you have the same bee in the same bonnet. Our problem originated with finance, and you want to cure it with the same ill? Our problem, Mr. Akkawi, can only be cured by fighting the cancer not feeding it.REFORMS, REFORMS, REFORMS are the “mot d’ordre” Mr.Akkawi. Cut down the interest rate on the debt by two per cent. Mr. Akkawi and you save Lebanon $109 billions over the next seventeen years. REFORM EDL and you save $2.00 billions a year.Collect the 6% real estate registration fees adequately and scrap the law that allows Limited companies to skirt the fees and you save $1.7 billion dollars a year.Finally tell our politicians to make up their damn mind and start the gas & oil exploration and devote the first ninety billions toward repaying the debt, and you will end up debt free by 2031.Come on Yasser, stop groping in the dark and face reality for God’s sake! Had you promoted this program in 2006, when I first proposed it to you, at the time, we would have been debt free by now. Instead we may reach that end in 2031, if all goes well. InshÁllah!

Moe September 24, 2015 - 11:12 AM

Totally agree with you. But I’m asking you would the banks finally let go of there huge deposits and reserves to finance such “REFORMS” ? The government is fully dependent on the central bank for financing however they haven’t financed any real reforms in this country for over 2 decades ! They’ve pilled up huge amounts of assets (double the GDP) yet they are the only ones benefitting from this. And the country hasnt seen growth !

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