Budget 2024: The BDL, with its Council, will not fund a budget deficit approved by parliament under any circumstances

Amid Lebanon's deepening economic crisis, Banque du Liban (BDL) Council members unanimously emphasize their steadfast position on "not printing lira to cover the budget deficit." They assert that using the remaining reserves of dollars to address the shortfall is also impossible. 

This message was communicated explicitly to Parliament Speaker Nabih Berri, Prime Minister Najib Mikati, and all ministers and deputies without exception. Sources within the Council express astonishment that "Finance Minister Youssef Khalil does not defend the 2024 budget bill, which has been stripped of many items, leading to an additional deficit estimated at around LBP 17 trillion."

This article was originally published in and translated from Lebanese newspaper Nidaa Al-Watan.

The sources state, "There is a dangerous adventure undertaken by the bidders and populists, which will lead to a new exchange rate collapse, placing the BDL in a situation it vehemently rejects. If a new governor is appointed in 2024, he will have the latitude to do as he pleases according to the existing political dynamics."

The sources highlight the situation, "The problem since the 1990s has been the budget deficit, which was covered by borrowing until the public debt escalated dangerously, prompting creditors to refrain from lending to Lebanon. Consequently, the BDL began financing the governments from depositor funds under the current deputies."

The sources support most statements regarding the need to avoid arbitrary expansion in taxes and fees, advocating instead for a serious campaign against tax evasion and customs smuggling. 

They emphasize, "Tax evasion and smuggling are age-old problems in Lebanon, and all the talk about combating these ills overnight is a trivialization and an evasion of the fact that Lebanon lacks a real state. A state must be rebuilt from scratch, requiring a phased program that does not deny the necessity of not approving a deficit budget today."

Therefore, the sources warn deputies that "the current BDL with its Council will not, under any circumstances, fund a budget deficit approved by parliament."

The sources reiterated that the 2024 commitments are pivotal for MPs, stating, "Either we begin to emerge from the crisis, or it prolongs, and Lebanon does not emerge from it for at least ten years. Relying on oil and gas is an illusion because revenues, even if significant gas is in commercial quantities, will not come before 5 to 7 years."

In conclusion, the sources remind MPs of the imperative need to approve a series of legislations that can no longer be evaded, notably: "Bank restructuring, reassessment of financial normalization (which determines the fate of deposits), approval of 'capital control,' and the amendment of the banking secrecy law once again to align with international standards emphasized by the International Monetary Fund (IMF). Otherwise, it means more deadly bids and populism!"