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Updated February 4th, 2024 at 12:28 IST

Lebanon’s parliament approves 2024 budget, excludes reforms

The amended budget, presented by caretaker premier Najib Mikati, anticipates increased state revenues from VAT and customs fees.

Business Desk
Lebnon
Lebnon | Image:iStock
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Lebanon budget 2024: Lebanon's parliament approved the 2024 budget on Friday, drawing criticism for its failure to incorporate essential reforms crucial for steering the country out of a prolonged financial crisis. The budget, subject to heated debates over three days, lacks measures seen as necessary to address the dire economic situation that has plagued Lebanon for nearly five years.

The amended budget, presented by caretaker premier Najib Mikati, anticipates increased state revenues from VAT and customs fees. Notably, it includes provisions targeting those who illicitly benefited from the central bank's previous currency exchange platform and traders profiting from subsidies on imports. However, experts argue that the budget falls short of implementing key reforms needed to secure a $3 billion aid package from the International Monetary Fund (IMF).

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Lebanon's economic turmoil, triggered in 2019, has seen its currency lose around 95 per cent of its value, locking most depositors out of their savings and pushing over 80 per cent of the population below the poverty line. The financial crisis, fueled by years of overspending and corruption, has led to losses exceeding $70 billion in the financial system, primarily at the central bank.

The IMF has repeatedly called for reforms, including measures to resolve the banking crisis and unify exchange rates, but political and economic interests have obstructed progress. The passed budget uses various exchange rates, potentially creating a misleading surplus in Lebanese pounds while not addressing the shortage of dollars.

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Caretaker Premier Mikati defended the budget, claiming the government has halted the collapse and initiated the recovery phase. However, critics, including parliamentarians, voiced objections during the session, highlighting the divisive nature of Lebanese politics.

The Policy Initiative think tank criticised the budget for disproportionately burdening middle and lower-income households, citing reduced thresholds for VAT payments and tax exemptions for large businesses. Lebanese economics expert Sami Zoughaib characterised the budget as "Lebanese economic alchemy," lacking a clear vision and perpetuating a cycle of decay for the state, the economy, and society.

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(With Reuters inputs)

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Published January 27th, 2024 at 14:10 IST

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