|
|
|
|
|
Lebanon's deep-rooted economic crisis has cast a long shadow over businesses throughout the nation, pushing many to the brink of insolvency or forcing them to cease operations altogether. The confluence of factors, including exorbitant electricity costs, persistent shortages in power supply, and the unsightly accumulation of waste on the streets, has rendered the prospect of normal business operations utterly unviable for a multitude of enterprises. The dearth of resources stemming from Lebanon's precarious economic state has left local authorities grappling with their inability to offer effective remedies.
|
|
|
|
In this precarious economic landscape, LIMS has advanced a compelling argument, suggesting that the private sector possesses the potential to fill a critical void by directly delivering essential services to businesses and households at the municipal level. Through a harmonious collaboration with local municipalities, privately owned and managed solutions in key areas such as electricity provision, waste management, and infrastructure development could provide a much-needed respite. This symbiotic relationship would yield mutual benefits: local businesses would experience a marked improvement in operational efficiency, while companies engaged in service delivery would encounter fresh revenue opportunities in the midst of this economically turbulent period.
|
|
|
Lebanon's Timely Budget Submission: Imbalances Persist Amidst Calls for Reform
|
|
|
|
Lebanon's 2024 budget submission marks an achievement, representing the first time a timely budget draft has been presented since the year 2002. Nevertheless, the budget's equilibrium remains elusive, with a staggering 41.73 trillion LBP fiscal deficit, even after implementing substantial increases in fees, tariffs, and taxes. This deficit has reached record proportions, all while Lebanon continues to refrain from servicing its Eurobond obligations and accounting for subsidy costs clandestinely concealed within the central bank's accounts. It is untenable that the government would proffer imbalanced budgets, particularly in light of the protracted four-year crisis that has besieged the nation. With debt markets firmly closed and the central bank refusing to finance the deficit in either LBP or USD, a pressing question emerges: How will this deficit be financed?
|
|
|
|
LIMS, in response to this fiscal scenario, urges parliamentarians to reject the budget as currently presented and, in its stead, demand a balanced budget proposal. LIMS contends that the budget is unduly inflated in its expectations for revenues, with a projection of a 75% upsurge, attributed to higher taxes and fees. However, this optimistic projection remains far from realistic, as the imposition of elevated taxes and tariffs will inevitably propel businesses to shutter their operations, thus exacerbating tax evasion and creating a fertile ground for illicit activities such as smuggling.
In order to restore fiscal equilibrium, LIMS offers a series of recommendations. First and foremost, it advocates for a comprehensive overhaul of the existing tariff and tax structures, with a particular emphasis on reducing rates and transitioning to a flat tax system. Such measures promise to broaden the tax base thus providing alternative avenues for financing. Moreover, LIMS underscores the pressing need for the government to liberalize key sectors, most notably in the fields of telecommunications and electricity. By permitting competition and enabling private sector participation, the government can not only save on the cost of investments but also mitigate the substantial losses it has historically incurred due to its mismanagement of these critical sectors. In doing so, Lebanon can embark on a path toward fiscal responsibility and sustainable economic growth, ultimately securing a brighter future for its citizens.
|
|
|
The Progressive Socialist Party Invites LIMS to Delve into Lebanon's 2024 Budget
|
|
|
|
The Progressive Socialist Party extended an invitation to LIMS for an in-depth dialogue concerning Lebanon's 2024 budget draft and the intricate monetary landscape. This meeting brought together esteemed members of parliament and several board members from the party.
LIMS underscored the increase in the fiscal deficit and the ensuing inflationary pressures, emphasizing the far-reaching implications of these developments. The discussion further delved into the implications of an expanding fiscal burden that would prolongs the prevailing recession. The repercussions of each tax increase on the nation's economic output was elaborated. The pivotal role of government downsizing and the empowerment of the private sector were suggested as essential steps toward resolving these multifaceted fiscal and economic challenges.
|
|
|
Unlocking Lebanon's Public Procurement: Breaking Monopolies and Enhancing Competition
|
|
|
|
Public procurement in Lebanon has long grappled with two persistent deficiencies: firstly, the government's proclivity for granting monopolies in service provision. This monopolistic tendency often results in subpar services for the public and exorbitant prices. Secondly, there is the recurring issue of a limited number of bidders participating in these tenders. This paradox is perplexing, given that the monopolistic nature of these services should theoretically attract a wide array of bidders keen to capitalize on the monopoly rents. A prime illustration of this monopolistic service delivery in Lebanon is the vehicle inspection tender.
|
|
|
|
LIMS has released an exclusive policy brief delving into the latest tender for mechanical vehicle inspections in Lebanon, a mandatory requirement for Lebanese drivers. After years of flawed tenders, the Ministry of Interior has, commendably, issued a new tender in adherence to the principles of public procurement law, marking a significant achievement. The fresh tender also endeavors to foster competition and enhance the participation of small and medium-sized enterprises (SMEs). However, akin to its predecessors, this tender restricts the number of inspection centers to the existing four facilities located in Mount Lebanon, the South, the Bekaa, and the North. LIMS has argued that this approach perpetuates a monopoly in car inspection within each region, burdening citizens with bad service quality, the inconvenience of dedicating an entire day to the inspection process, enduring lengthy queues, and incurring additional fuel expenses for the round trip to the inspection center. LIMS advocates a paradigm shift away from awarding monopolies through tenders and instead, granting licenses to repair shops to conduct inspections, thus introducing much-needed competition. Such an adjustment could potentially expand the number of inspection centers to hundreds, break free from monopolistic constraints, stimulate investments, particularly in underserved rural and peripheral areas, encourage healthy competition, streamline citizen procedures, reduce financial burdens, and bolster state revenues.
Additionally, LIMS has released another exclusive policy brief elucidating why Lebanon consistently faces a challenge in attracting bidders. The report underscores that the procurement law contains several flaws. Chief among these are stipulations that necessitate contracts to be executed in Lebanese pounds, amidst an environment of extreme exchange rate volatility, thus exposing suppliers to substantial potential losses, which disincentivizes their participation. The law's unrealistic timelines for contract validation and payment order issuance also deter potential bidders. Moreover, the requirement to establish new procurement units mandating the hiring of specialized staff may inadvertently encourage the unwarranted expansion of the public sector workforce. The policy brief suggests amending the law to introduce flexibility, align timeframes with real-world conditions, permit contracts in stable foreign currencies, and curtail hiring while allowing for the transfer of excessive employees from other government departments to the public procurement authority. Those reforms would attract a more diverse pool of bidders, ultimately leading to improved public procurement outcomes for the benefit of both the population and the government.
|
|
|
Lebanon Navigates Transition from SAYRAFA to Bloomberg Amidst Exchange Rate Concerns
|
|
|
|
Lebanon finds itself at a pivotal juncture, as it embarks on a transition from the established SAYRAFA electronic currency exchange platform to the Bloomberg platform. This shift has ignited concerns throughout the nation, particularly concerning the future trajectory of the exchange rate. SAYRAFA has garnered praise for its role in maintaining exchange rate stability over recent months, prompting many to question the implications of this transition.
|
|
|
|
In response to these concerns, LIMS has offered a discerning perspective, elucidating the critical distinctions among exchange rate unification, stability, and transparency.
LIMS underscores the primary objective behind the shift from SAYRAFA to Bloomberg, which is to augment financial transparency. Market participants granted access to SAYRAFA remain unknown while their access affords them substantial profits, enabling them to acquire US dollars at a considerable discount ranging from 10% to 20%. This differential arises from the disparity between the SAYRAFA rate and the prevailing market rate. Moreover, the mechanisms governing the establishment of the SAYRAFA exchange rate remain opaque. It appears that the exchange rate is subject to discretionary adjustments by the central bank, involving deductions of 10% to 20% from the black-market rate. The shift to Bloomberg is expected to deliver transparency, offering insights into exchange rate determinations and key market participants.
LIMS added that the transition to Bloomberg holds the potential to facilitate exchange rate unification, contingent upon granting all market participants direct or indirect access to the platform through market makers. In this scenario, the black market would disappear, with the Bloomberg exchange rate becoming the singular floating rate within the country. This transition would empower legal businesses to conduct their foreign exchange transactions in a transparent and dependable manner, liberating them from the clutches of the black market. Such transparency is anticipated to mitigate the risks associated with money laundering and terrorism financing, bolstering Lebanon's financial integrity. On the flip side, should the central bank choose to manage Bloomberg in a manner akin to its approach with SAYRAFA, characterized by restricting market participants and rationing the supply of dollars, Bloomberg would merely metamorphose into another incarnation of SAYRAFA, albeit under a distinct moniker. Such a scenario would erode all the potential benefits outlined earlier.
Finally, LIMS is quick to caution that the platform itself, whether it's Bloomberg or SAYRAFA, is largely immaterial when it comes to exchange rate stability. The exchange rate is intrinsically tethered to the money supply of the Lebanese pound. Monetary stability hinges upon the central bank's commitment to eschew financing the fiscal deficit and government expenditures and maintain a steady money supply. Deviation from this path, by contrast, could send Lebanon on yet another devaluation trajectory.
|
|
|
Lebanon's Central Bank Undergoes Forensic Audit, Revealing Misconduct and Substantial Losses
|
|
|
|
|
A comprehensive forensic audit conducted by the New York-based firm Alvarez and Marsal has shed light on a period of impropriety presided over by the central bank's former governor. The audit's findings disclose $111 million in "illegitimate commissions," according to a report issued by the company. The implementation of this forensic audit had been a paramount demand from the international community and the International Monetary Fund, who, over the years, had increasingly lost faith in Lebanon's ability to navigate its profound crisis.
|
|
|
LIMS expounds upon the revelations of the forensic audit, underscoring the sheer magnitude of foreign reserve losses sustained by the central bank, amounting to a staggering $71.9 billion USD. Those losses were obscured through the utilization of unorthodox and unconventional accounting standards, with the central bank's governor personally benefiting from financial engineering operations. However, the remaining $71.8 billion in losses remains unexamined, warranting an extension of the forensic audit to encompass government ministries that were recipients of these funds. Notably, the primary objective of this financial engineering was to underpin government financing, making it imperative to scrutinize how these resources were allocated and utilized.
|
|
|
A Structured Dialogue Event Between: The European Union Delegation to Lebanon and Local Civil Society
|
|
|
|
LIMS was invited by Transparency International Lebanon in cooperation with European Union to attend a workshop on September 12, 2023. The main goal of the event was to gather participants from Civil Society Organizations (CSOs) including local and international NGOs and academics, to discuss critical reforms addressing Lebanon's most pressing priorities.
|
|
|
|
Dr. Mardini, the CEO of LIMS, participated at a session promoting a green and sustainable recovery for Lebanon. During his intervention, he showcased the Toula Solar Farm in North Lebanon as an example, illustrating how addressing the electricity problem on the municipal level could be a feasible solution. Dr. Mardini argued that Toula could serve as a blueprint for other municipalities across Lebanon's villages and towns. Mrs. Kristelle Mardini, COO of LIMS, also participated in the event. She highlighted LIMS' efforts at the local level, collaborating with the private sector to assist municipalities in providing fundamental necessities such as water, electricity, and waste management. Additionally, she discussed LIMS' involvement at the national level, emphasizing initiatives to dismantle public monopolies in sectors like telecom, airlines, and electricity. LIMS overarching goal is to enhance competition and efficiency in these critical areas.
|
|
|
References
LIMS Media Interviews
|
|
|
|
A Unique Opportunity for Private Sector Solutions on the Municipal Level
- LIMSLB Exclusive: “Wholesale” Violations By The Ministry Of Energy In Bringing In Fuel Ships Before Opening Credits... What Is Required Is A Solution To The Electricity Problem At The Municipal Level In Cooperation With The Private Sector, September 1, 2023: LimsLb, Article AR
- A Solution To The Electricity Crisis: A Role For Municipalities In Encouraging The Private Sector, September 3, 2023: VDL, TV Interview AR
- It Is Time For The Lebanese Government To Exit The Formal Sectors And Open Competition to the private sector, September 14, 2023: Al Jadeed, TV Interview AR
- Where Did The Government Waste SDR Money? September 20, 2023: Leb Economy, Article AR
- Is The Authority Unable Or Unwilling To Implement Reforms? Mardini To Diyar: The IMF’s Tendency To Write Off Deposits Means Huge Losses For Depositors And The Bankruptcy Of A Large Number Of Banks, September 21, 2023: Addiyar, Article AR
- A New Episode Of The Ten On Ten Program With The Director Of The Lebanese Institute For Market Studies, Dr. Patrick Mardini, September 28, 2023: Daleel Koura, TV Interview AR
- Mardini To Close The Electricité Du Liban And Transfer Its Powers To The Municipalities In Cooperation With The Private Sector, September 29, 2023: VDL, TV Interview AR
- Solutions To The Lebanese Crisis Exist And Are Available, And It Is Not Too Late, September 29, 2023: SBS, Radio Interview AR
- Issuing Electricity Bills In Dollars At A Price Of 103 Thousand Pounds...Paying In Pounds Will Charge The Subscriber A 15% Increase Over The Dollar, September 29, 2023, Annahar: Article AR
Lebanon's Timely Budget Submission: Imbalances Persist Amidst Calls for Reform
- Patrick Mardini: The Budget's Focus On Taxes And Fees Has A Negative Impact On Increasing The Economic Momentum, September 3, 2023: Al Jadeed, TV Interview AR
- How Will the Budget Deficit Be Financed? September 8, 2023: Al Jadeed, TV Interview AR
- Taxes Are A Gateway To Increasing Recession... “Welcome To Evasion And Smuggling”, September 12, 2023: Lebanese Forces, Article AR
- How Will The Deficit Be Filled? September 15, 2023: VDL, TV Interview AR
- It Is Shameful That Budgets Continue To Be Prepared In This Way, September 16, 2023: Hadath Online, Article AR
- The Budget Has Been Completed, But How Will It Be Funded? September 26, 2023: Al Jadeed, TV Interview AR
- Patrick Mardini To “Huna Talks”: The Central Bank’s Step Not To Fund The State Is Positive, September 26, 2023: Hona Lobnan, TV Interview AR
- Budget 2024 Masculinity: The Inequality Between The Razor And The Sanitary Napkin, September 27, 2023: Al Modon, Article AR
- LIMSLB Exclusive: The Court of Audit Drops The Obligation On The Post For CMA CGM Due To Violations, September 28, 2023: LIMSLB, Article AR
The Progressive Socialist Party Invites LIMS to Delve into Lebanon's 2024 Budget
- “Progressive” Discussed The 2024 Budget...It Should Not Come At The Expense Of People With Limited Income, September 25, 2023: Anbaa Online, Article AR
Unlocking Lebanon's Public Procurement: Breaking Monopolies and Enhancing Competition
- LIMSLB Exclusive: The Mechanical Inspection Tender “Formally” Adhered To The Public Procurement Law... And “Implicitly” Violated The Need To Dismantle Monopolies, September 18, 2023: Article AR
- LIMSLB Exclusive: Harmonizing “Public Procurement” To Motivate Suppliers To Submit To Tenders Instead Of Repeating Single Bidder Scenarios, September 25, 2023: LIMSLB, Article AR
Lebanon Navigates Transition from SAYRAFA to Bloomberg Amidst Exchange Rate Concerns
- How Will The Creation Of The “Bloomberg” Platform Affect The Exchange Rate? September 4, 2023: Leb Economy, Article AR
- The Stability Of The Lebanese Pound...The Dollar Exchange Rate In Lebanon Today, Monday, September 4, 2023, September 4, 2023: Khaligyoun, Article AR
- Lebanon Uses The “Bloomberg” Platform In An Effort To Control The Exchange Market, September 8, 2023: Asharq, Article AR
- Lebanon Relies On The “Bloomberg” Platform To Combat The “Cash Economy.” The Deputy Prime Minister Told “Al-Sharq”: The First Goal Is To Unify The Dollar Exchange Rate, September 11, 2023: Asharq, Article AR
- End Of The Summer Season: Tourism Dollars Do Not Save The Economy, September 12, 2023: Al Modon, Article AR
- What Are The Repercussions Of The launch Of The New Platform On The Economic Reality?, September 13, 2023: SBI, TV Interview AR
- The “Bloomberg” Platform...The Wood Of Salvation Or The Bullet Of Mercy? September 14, 2023: Al Afdal News, Article AR
- The Modest Reforms Of The Lebanese Banking Sector Are Burdening The Economy. The International Monetary Fund Is Calling On Lebanon To Undertake A Series Of Reforms, Including Adopting A Budget For The Year 2024, Amending The Banking Secrecy Law, And Restructuring The Banking Sector, September 15, 2023: Al Arab, Article AR
- Unifying The Exchange Rate And Raising The Exchange Rate Of Withdrawals, September 16, 2023: MTV, TV Interview AR
- Financial Transfers From Expatriates Have Become A Curse On The Lebanese Economy? September 18, 2023: Al Modon, Article AR
- Two Months Later... Acting Governor Of The Bank Of Lebanon, Mansouri, Is In The Balance Of Failure And Success, September 18, 2023: GrandLb, Article AR
- New Developments.. The Price Of The Dollar In Lebanon Today, Wednesday, September 20, 2023, September 20, 2023: Khaligyoun, Article AR
- How Unrestrained Financial Power Dragged Lebanon into the Abyss, September 20, 2023: Oxford Political Review, Article EN
- The Price Of The Dollar In Lebanon Today, September 21, 2023, September 21, 2023: Al Amsar, Article AR
- The Price Of The Dollar In Lebanon Today, Friday, September 22, 2023.. Obsession With Bank Bankruptcy. Fears Of Banking Reform Are Increasing, September 22, 2023: Al Ain, Article AR
- How Can The Banking Sector Be Reformed In Lebanon? September 23, 2023: Al Jadeed, TV Interview AR
- A “Gold Bracelet” In Lebanon Is Stronger Than The Banking System, September 25, 2023: Independent Arabia, Article AR
Lebanon's Central Bank Undergoes Forensic Audit, Revealing Misconduct and Substantial Losses
- Where Is The Country Headed With Helene Hallaq? September 19, 2023: Sawt Al Chaeb, Radio Interview AR
- Does Forensic Audit Fulfill The Lebanese People’s Dreams Of Holding The Corrupt Accountable? September 20, 2023: Radio Ehden, Radio Interview AR
|
|
|
|
|
|
|
|
