Bankrupt government: Lebanon faces dire shortage of dollars for salaries and necessities

All state departments and institutions have been notified that no salaries are available in dollars at the end of the month.

The government is bankrupt, and the bigger problem is that the situation has left the government without the necessary funds to cover essential expenses like medicines, fuel, food for the army, internet, and other expenses in dollars.

The decision to suspend the Banque du Liban (BDL) funding to the government is irreversible, according to deputy governors, unless a law authorizing borrowing is adopted.

Over the past week, the government and MPs have been tossing the responsibility for the law back and forth, with no clear consensus on whether it should be a government draft law or a proposal law presented by ten MPs.

The Prime Minister said he tasked the Finance Minister to consult with the deputy governors on the draft law this week.  

However, since the discussions with the ministry have not started yet, dialogue will likely require more time.

The Finance Ministry is preparing for intensive meetings next week to reach a specific formula that will be presented to the government.

Meanwhile, deputy governors have taken a firm stance, declaring they are not concerned with the loan amount, duration, or distribution as their demands are limited to two main points.

First, there must be a clear and convincing mechanism for the government to repay the loan, with deputy governors proposing reforms such as improving tax collection and cracking down on tax evasion and smuggling.

The second point is that the loan contract should be subject to suspension at any time by the Central Council of the BDL if officials fail to enact the reform laws within the timeframe set in the deputy governors' recovery plan, which starts with correcting and adopting the 2023 budget and passing the Capital Control Law by the end of August.

Nonetheless, deputy governors are not optimistic about the legislative process.

According to sources of Wassim Mansouri, the acting governor of the BDL, Lebanese officials seem to have forgotten about reforms. They are stalling the law's adoption, debating whether it will be a draft or proposed law, even though reforms are more important than any amount of money or law.

In conclusion, as the first week of August ends, there is still no clear solution to the law, and time is running out for salaries due in September.