BEIRUT: Lebanon’s finance minister said on Tuesday there was no need for more talks over the 2019 draft budget, seen as a vital test of the government’s will to reform, although the foreign minister signalled the debate may go on.
The cabinet says the budget will reduce the deficit to 7.6% of gross domestic product (GDP) from last year’s 11.2%. Lebanon has one of the world’s heaviest public debt burdens at 150% of GDP.
“There is no longer need for too much talking or anything that calls for delay. I have presented all the numbers in their final form,” Finance Minister Ali Hassan Khalil said.
But Foreign Minister Gebran Bassil suggested the debate may go on, telling reporters: “The budget is done when it’s done.”
While Lebanon has dragged its feet on reforms for years, its sectarian leaders appear more serious this time, warning of a catastrophe if there is no serious action. Their plans have triggered protests and strikes by state workers and army retirees worried about their pensions.
President Michel Aoun on Tuesday repeated his call for Lebanese to sacrifice “a little“: “(If) we want to hold onto all privileges without sacrifice, we will lose them all.”
“We import from abroad, we don’t produce anything ... So what we did was necessary and the citizens won’t realize its importance until after they feel its positive results soon,” Aoun said, noting Lebanon’s $80 billion debt mountain.
A draft of the budget seen by Reuters included a three-year freeze on all forms of hiring and a cap on bonus and overtime benefits.
It also includes a 2% levy on imports including refined oil products and excluding medicine and primary inputs for agriculture and industry, said Youssef Finianos, minister of public works and transport.
“DEVIL IN THE DETAIL“
Marwan Mikhael, head of research at Blominvest Bank, said investors would welcome the additional efforts in the latest draft to cut the deficit.
“There will be some who claim it is not good because they were hit by the decline in spending or increased taxes, but it should be well viewed by the international community,” he said.
Jason Tuvey, senior emerging markets economist at Capital Economics, said: “The numbers will be of some comfort to investors, but the devil will be in the detail.”
“Even if the authorities do manage to rein in the deficit, it probably won’t be enough to stabilize the debt ratio and some form of restructuring looks increasingly likely over the next couple of years,” Tuvey said.
The government said in January it was committed to paying all maturing debt and interest payments on the predetermined dates.
Lebanon’s main expenses are a bloated public sector, interest payments on public debt and transfers to the loss-making power generator, for which a reform plan was approved in April. The state is riddled with corruption and waste.
Serious reforms should help Lebanon tap into some $11 billion of project financing pledged at a Paris donors’ conference last year.
Once approved by cabinet, the draft budget must be debated and passed by parliament. While no specific timetable is in place for those steps, Aoun has previously said he wants the budget approved by parliament by the end of May.
On Monday, veterans fearing cuts to their pensions and benefits burned tires outside the parliament building where the cabinet met. Police used water cannon to drive them back.
No need for more talks over draft budget: Lebanon finance minister
No need for more talks over draft budget: Lebanon finance minister
- Lebanon’s proposed austerity budget may please international lenders but it could enrage sectors of society
- Lebanon has one of the world’s heaviest public debt burdens at 150 percent of GDP
As world fractures, experts weigh in on the politics of AI at WGS
- e& group CEO Hatem Dowidar said there was increasing pressure to choose between the Chinese and US ecosystems
DUBAI: Across three days of rigorous debate at the World Government Summit in Dubai, experts from some of the world’s largest tech and telecommunication companies debated what the future political landscape of artificial intelligence development would be.
Speaking at the summit on Thursday, e& group CEO Hatem Dowidar said there was increasing pressure to choose between the Chinese and US ecosystems, which could have impacts on the sovereign capabilities of countries, like Gulf Cooperation Council member states, which thus far have stayed in the middle.
“I think the fracture and the pressure today is if you use this technology, you cannot use the other. You must separate them completely and this is something that never happened before,” Dowidar said.
He warned that whilst people around the world currently have access to both the leading large language models in the US and China, ChatGPT and Deepseek, this would not always be the case, and middle powers would need to develop their own capability to maintain their sovereignty.
“Europe is trying to find its own way as well, because Europe — having been caught now in the middle — they don’t have platforms, they don’t have the data center capability,” he said.
“So now, Europe is focusing a lot on building sovereign capability, sovereign data centers to run AI applications within Europe.”
Dowidar said the GCC had been ahead of the curve in this regard, having worked out early on that sovereign capability would be necessary in the new multipolar world and subsequently investing heavily in local infrastructure and capability.
“We were lucky here in the region that already — I would say a couple of years ago —we have kind of ironed out how this works,” he said.
“I think that everyone will try to see how they can either utilize the global platforms in a sovereign manner, or they end up trying to push to develop their own platforms.”
This sentiment was echoed by Chamath Palihapitiya, the founder and managing partner of Social Capital, who said that China’s dedication to open-source models — whose code is released under a license granting users rights to view, study, modify, and redistribute it freely — could make Chinese AI more popular in the long run for nations looking to keep some level of sovereignty.
“I do think that there are a handful of American open-source models that are quite good. I think Nvidia’s models are excellent. But in fairness, the Chinese open-source models are just superb,” he told the summit on Wednesday.
“It’s going to be important for every country to make their own decisions about their own sovereignty, and in that realm, I think the open-source models provide the clearest path, because it just gives you total transparency to what’s happening underneath the hood.”
This was reiterated by Joseph Tsai, the chairman and co-founder of Alibaba Group, who said Chinese open-source systems would be favored by middle powers — but warned they had yet to find a way to be economically self-sufficient.
“Because countries care about the sovereignty aspect and care about their data privacy, you can take an open-source model and deploy it on your own infrastructure … giving you ownership and control” he said.
“But it remains to be seen how economically all the model companies are going to make it sort of sustainable with an open-source approach … This is the biggest challenge for the Chinese firms.”
