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BEIRUT: The Lebanese parliament on Monday approved more than US $ 400 million in extrabudgetary spending on fuel for power plants, which avoids a new crisis in electricity supply but aggravates the budget deficit.
In the absence of sign of a final agreement to form a national unity government led by the prime minister-designate, Saad al-Hariri, six months after the elections, Parliament opened on Monday a session two days of legislation to deal with urgent laws.
Last week, the Algerian oil company Sonatrach agreed to offload the fuel needed to avoid further power cuts on the promise that Parliament would meet this week and allow payment by the Ministry of Finance.
Finance Minister Hassan Ali Khalil said he was reluctant to implement extrabudgetary spending without Parliament's approval.
Lebanon has the third largest public debt in the world in proportion to the economy and stagnant growth. A government in a position to make economic reforms – including in the electricity sector – that is considered more pressing than ever is absolutely necessary.
Khalil said the national electricity supplier Electricity of Lebanon (EDL) needed 642 billion Lebanese pounds more (430 million USD / 331.4 million USD) compared to the 2100 billions allocated in the 2018 budget to cover fuel requirements for the rest of the year.
Since the end of the civil war in 1990, Lebanon has been experiencing chronic shortages of electricity from three to 18 hours daily. Those who can afford it pay expensive and polluting generators from the private sector to fill the gaps in supply.
An EDL source said Monday that the fuel had been unloaded.
Before the conclusion of the agreement with Sonatach, EDL had started to reduce its energy production and said that it should gradually close down its plants if no payment solution was found.
The first task facing the new Lebanese government is to reduce the double fiscal deficit and the current account deficit and to cope with the country's growing debt, which, according to the World Bank, will be around 155% of the country's GDP. 39, here at the end of 2018.
According to the World Bank, the first step in this direction should be a reform of the electricity sector, describing CHP subsidies as an "overwhelming burden" for national finances.
Last year, the government spent $ 1.3 billion on EDL, or 13% of primary spending.
At a meeting of international donors in April in Paris, where more than $ 11 billion worth of investment had been pledged in exchange for reforms, Prime Minister Hariri pledged to reduce the budget deficit as a percentage of the country's GDP. five percent over five years.
(Report by Lisa Barrington, edited by William Maclean)
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