The seat of the President of the Lebanese Republic became vacant on May 25, 2014 after failure to elect a successor to the outgoing President Michel Suleiman upon expiry of his term. Parliament has so far convened more than 13 sessions to elect a President but the lack of quorum has kept aborting the operation. If you lived in a country whose constitution stipulates the presence of a President of the Republic, yet no President assumed office and the republic functioned as a headless state, would that be a reason for optimism or pessimism?

 

The Lebanese have been suffering from power cuts for several years. Every day, most of Lebanon’s regions plunge into partial blackouts for several hours, because the country is in need of 2500 to 2600 megawatts of electricity while the current production does not exceed 1600 MW. As a result of electricity theft, large numbers of people who do not pay their electricity bills and a billing structure that does not reflect production costs, the state has to subsidize Elécticité du Liban by roughly USD 2 billion annually. There does not seem to be any solution for this service and financial crisis in the near future and thus citizens are faced with one of two options: either live in the dark or pay hundreds of dollars every month to subscribe to private generators.  If you lived in a country without constant supply of electricity, is this a reason for optimism or pessimism?

 

The most recent public budget approved by Parliament dates back to 2005. It was approved pursuant to Law no. 715 dated February 3, 2006. Since then, Lebanon has been without a budget and public spending has been happening on the basis of the “one-twelfth” rule, which may serve as an alternative for a few months should there be a delay in the approval of the budget, but not for nine years as is the case today. Failure to approve public budgets has led Parliament to approve Law 238, dated October 22, 2012, which permitted the opening of extra credits worth LBP 9248.6 billion in the 2005 budget to cover extra budgetary spending, since it is by no means possible in 2012 and the following years to abide by the same spending figures adopted in 2005.

 

In 2013, the state’s expenditure stood at LBP 20,563 billion while its revenues amounted to LBP 14,201 billion, meaning a deficit of LBP 6,362 billion or 31%. In contrast, the deficit stood in 2012 at 29.5% or LBP 5,917 billion with spending reaching LBP 20,081 billion and revenues LBP 14,164 billion.

 

Over the past nine years, deficit has been growing steadily but the major problem does not reside in not approving the budget or in the size of that deficit.  In fact, the problem lies in the fixed expenses in the budget, for the public debt servicing and the salaries and indemnities of both serving and retired public employees account alone for more than 75% of the state’s spending. If you were living in a budget-less country, with all the harm that such a state would bring on both public accounts and institutions,  would that be a reason for optimism or pessimism?

 

There are no accurate data on the exact unemployment rates in Lebanon. Reported official statistics put it at 10% while some estimate it to be twice as high or even more, especially after the arrival of the Syrian refugees who have replaced their Lebanese counterparts in several industrial, trade and tourist facilities. Unemployment rates are likely to increase by the year against the dreadful economic conditions, the decline in the private sector’s activities and the modest availability of opportunities within the public sector. It is commonly known that nearly 35,000 newcomers enter the labor market every year at a time when the vacancies in the public and private sectors combined do not exceed 7000. This means that the rest go unemployed or seek employment overseas. The government’s agenda does not allocate any of its items to address unemployment or prevent its escalation. If you lived in a country where one quarter of the population are jobless, would that give you grounds for optimism or pessimism?

 

Against the decline in industrial and agricultural production, exports have also declined and the growing levels of consumption needs have thus been met through imports. This has translated into a chronic increase in Lebanon’s trade deficit. In 2012, export revenues amounted to USD 5.6 billion, a number that dropped to USD 5.2billion in 2013. In contrast, imports stood at USD 22.1 billion in 2012 then increased to USD 22.2 billion in 2013, meaning that the deficit jumped to USD 16.5 billion and USD 17 billion respectively. If you lived in a coutry where consumption levels are so high and production levels are so low, would that be a reason for optimism or pessimism?

 

In the 2012 draft budget, roughly LBP 1.476 billion were allocated to the Ministry of Education and Higher Education although the number of students in public schools does not exceed 275,000 and accounts for only 29.2% of Lebanon’s total pre-university student population. If you lived in a country where too much money is spent on public education that is trusted by hardly one third of the population and where parents have to afford tens of thousands of dollars annually to enroll their children in private schools, would that be a reason to be optimistic or pessimistic?

 

The state’s spending on healthcare and hospitalization reaches roughly LBP 2000 billion annually, yet more than half of the Lebanese still suffer from a lack of adequate health coverage owing to the soaring prices of medications and the high cost of hospitalization and compensations for physicians. The Social Security Fund is yet to fulfill its debt to private hospitals, which results in some of them refraining to admit the insured patients and forces those to pay the costs out of their own pockets or to seek private insurance. Does that trigger optimism or pessimism?

 

Despite the increase in the security forces personnel, which now include nearly 95,000 members, there has been a drastic rise in thefts and crimes. Murders increased by 303% and car thefts by 373% as illustrated in Table 1. If you lived in a country where your life and property may be jeopardized at any time, either by murder or by unfortunate threats to security such as military operations or car bombings, would that make you an optimist or a pessimist?