Lebanons mismanagement of internal and external grants since 1993

4^min

The recent report of the Lebanese Court of Audit sheds light on the financial chaos in the country's administration. The report highlights the waste in projects under supervision, let alone grants that were managed outside of the country's regulatory framework.

Between 1993 and 1996, there were no records of the state's accounts due to a fire that broke out in the Ministry of Finance, destroying all the official documents pertaining to the state's accounts. From 1997 to 2010, exceptional decisions and decrees were issued to accept grants without adhering to the legal procedures of approval through the Council of Ministers.

Furthermore, special accounts were opened for these grants, which were not registered within the budget and therefore not subject to effective supervision by the Ministry of Finance. Although 293 decrees were issued to accept grants, only 8 percent of them were registered in the Treasury's account, which is 23 decrees.

The Court of Audit report did not provide a final value for the grants, which were estimated to be worth billions of dollars, as they were in different currencies. However, the grants given in dollars and euros outside the Treasury's account exceeded $5 billion.

From 1997 to the present day, 176 special accounts were opened outside the Treasury's account, 53 of which belong to the Council for Development and Reconstruction. Some grants deserve particular attention, such as the European Union grant given in two installments: the first installment of 30 million euros was not registered as revenue but as a trust account, and the second installment of 12 million euros was recorded as a special account outside the Treasury's account.

Moreover, there was no decree issued for this grant, which was given to the Ministry of Finance, the Higher Relief Commission, and the UNDP. The Ministry of Finance was unaware of the grant, except for the part assigned to it, and an investigation is underway.

The Court of Audit also revealed legal problems with the accounts opened by the Ministry of Health at Bankmed to receive grants to combat COVID-19. It is not permissible to open an account in a private bank or outside the state's budget account.

In 2011, the Saudi donation for reconstruction in Lebanon was deposited into an account under the name of the High Relief Commission and the Council for Development and Reconstruction. The Prime Minister requested the transfer of $18 million from this account to purchase Eurobonds through the company, Medclear. In 2018, the balance of these bonds was requested to be liquidated, but the Governor of the Central Bank of Lebanon refused and did not execute the request.

The report highlights the existence of dormant accounts for the past three years, which are remaining balances of donations received by the state and have not been utilized. Negotiations are supposed to be conducted with the donors to transfer these balances to the treasury account and use them as recommended by the report.

In conclusion, the report shows the lack of financial discipline in Lebanon's administration, which has failed to adhere to legal procedures and regulations regarding the management of internal and external grants.