I-What is the purpose of the session?

Lebanese MPs are meeting on Thursday for the first day of a plenary session that will last until Friday evening, in order to adopt the annual state budget for 2022. The meeting was supposed to start on Wednesday but was postponed. During this meeting, members must debate and then vote, normally article by article, on a text that was approved by the government of Najib Mikati in Feb. 2022 before being revised by the parliamentary Finance and Budget Committee.

If the text is adopted at the end of the plenary session, it will be more than seven months behind the deadlines set out in the constitution. The budget should normally have been passed by Parliament by the end of January 2022.

Lebanon's adoption of an annual budget is one of the reforms expected by the International Monetary Fund to release a multi-billion-dollar financial assistance to a country in full economic collapse since 2019. 

II-What is happening inside and around the Parliament

Dozens of protesters gathered around 10 a.m. close to the Parliament, expressing their opposition to the draft budget that will be discussed by the MPs.

III-Key issues in the 2022 draft budget

While several exchange rates are currently in force in Lebanon, what rate will be adopted to credibly calculate the state's annual revenues? The document that MPs are considering contains three scenarios, depending on the exchange rate adopted: LL12,000, LL14,000 or LL20,000 to the dollar.

It is not yet clear at this stage if and how the rate that will be chosen will be applied in the context of state spending, including the salaries of civil servants, who have been demanding salary increases for months.

Tax lawyer Karim Daher noted to L'Orient-Le Jour the lack of “fairness” on the tax front, as the new taxes within the 2022 draft budget, if implemented, would be applied uniformly to taxpayers of all socioeconomic levels regardless of their respective incomes. Nearly 80 percent of the population in Lebanon lives in poverty, according to the UN.

IV - What is the context of this session?

Parliament did not pass a budget for the fiscal year 2021, and the delay in passing the 2022 budget does not bode well for a potential 2023 budget, which is approaching its constitutional deadline of at most the end of January 2023.

The adoption of credible, balanced budgets is among the reforms needed to convince the IMF board to lend funds to the country as part of a multi-year recovery process, which other international donors are expected to join in later. A preliminary agreement had been signed on April 7, in which the IMF said it was ready to release $3 billion over four years to help Lebanon.

In addition to the budgets, in order to benefit from financial assistance, Beirut should reform its civil service, resolve the issue of losses accumulated by its financial system and fight more effectively against corruption. A law on banking secrecy is also part of the package deal. It was approved by the legislature at the end of July, but its content did not convince the IMF. The law has since been sent back to Parliament by President Michel Aoun for a second reading.

The budget voting session is taking place as the election period for a new president began on Aug. 31, 2022. Current President Michel Aoun's mandate expires on Oct. 31, 2022.