The Lebanese Ministry of Finance is facing insoluble problems with the completion of the urgent response task of restructuring the provisions of the draft General Budget Act for the current year, in preparation for its approval by the General Assembly of the House of Representatives by the portal of the Finance and Budget Committee, which determines the “determination of the exchange rate of the lira” which will be articulated in the areas of expenditure and imports as a necessity and before reaching the stage of legislation.
Although the parliamentary and international situation seems to be easily accessible at the same time, according to a concerned official with whom Al-Rai contacted, it emphasizes the rigidity of the “abstainer” in his approaches and outcomes, after overthrowing the unprecedented collapse. the whole components of the monetary system and led to very sharp individual revenue contractions As a result of the free and successive decline of the domestic product over three years, from its highest level, which at the end of 2018 recorded about $ 55 billion , to less than $ 22 billion at present.
The current government has effectively “avoided” setting a clear exchange rate within the terms of the rescue plan it approved in its last constitutional session before switching to a business case.
Aware of the fact that the entire financial scene is being examined under “open eyes” by the International Monetary Fund experts who have insisted on including the general budget in the basket of binding obligations on the executive and legislative authorities before moving to the stage of the completion of the financing has moved. program agreement that is essentially suspended on the clutches of an integrated rescue plan The responsibility and seriousness of the immediate and subsequent repercussions of the new exchange rate decision, which will automatically double the cost of government and public services, with its qualitative weight exceeds the powers of the Ministry of Finance alone, and then rises to what it represents as a political reference according to the sectarian division of powers.
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While the Finance and Budget Committee presses to explain the government’s vision for dealing with the exchange rate in the budget, as a necessary input for the approval of the draft budget completed in the committee with 90 percent, and the Ministry of Finance asks to provide it before the next legislative session with a detailed report on how to spend, the chairman, Ibrahim Kanaan acknowledges that “people are unable to pay taxes and fees at the exchange rate or parallel market. There is an economic stagnation of 90% with which it is not permissible to increase fees and taxes, so an integrated plan must be drawn up to promote growth and work on confidence in the Lebanese economy, before talking about high, realistic or logical exchange rates to determine tax. ”
The official concerned pointed out that the current government had actually “avoided” setting a clear exchange rate within the framework of the rescue plan he approved in his last constitutional session before switching to business with the start of the new parliament. term May. It recognized “that the current exchange system is no longer sustainable, to close” the need to create a new monetary structure to restore confidence, combat inflation and exchange rate depreciation, and a transparent market-based mechanism for the fixing interest and exchange in place. tariffs.
And it has become clear, according to the official’s reading, that the exchange rate decision, based on the measurements of the collapses achieved, requires a broad political consensus at all levels of government, including the executive, legislative and monetary, which is mobilized by ‘ a “working” government with full powers. Approached by the current government, which said in its plan addressed to the IMF – taking into account what will be and what has not happened so far – “We have unified the exchange rate for authorized transactions (a previous procedure) after we have transformed the “exchange” platform into an appropriate trading platform through which all Authorized Transactions and the exchange rate are determined on a daily basis.
The exchange rate decision, according to the measures of the collapses achieved, requires a broad political consensus at all levels of government, including executive, legislative and monetary.
It thus becomes clear that the desired goal of the new exchange rate requires a decision similar to political suicide for a single party or a particular minister, as it will inevitably coincide with the data of an exchange platform, where the price of one dollar is. currently about 25.5 thousand pounds, which is equivalent to about 17 times the current official rate, which it adopts in the public financial statements until the budget is approved, including the ranks and salaries of the public sector, which has more than 300,000 civilians and military personnel, and all the resources of the public treasury, except for late adjustments which affected communication fees and some sources of collection at the airport and ports.
As for the justifications, the government refuted them in advance, and in their contexts the monetary system became complicated and distorted due to the multiplicity of exchange rates and became subject to abuse due to its lack of transparency and clarity.
Before the crisis, the Banque du Liban carried out unconventional financial activities to attract cash flow and support the stabilization of the exchange rate, and indirectly to finance the budget deficit. In the wake of the outflow of capital and large deposits, the phenomenon of multiple exchange rates arose, causing the currency to lose almost 90 percent of its value in the parallel market since October 2019, boosting inflation and its rate of three figures (actually exceeding the four figures), while this has led to support for some imports depleting a large part of the foreign exchange reserves.