The Lebanese government has approved a budget for the first time in 12 years. The issue had become a running gag, a symbol of the state’s chronic dysfunctional nature. But just when we thought that thrashing out an electoral law was the priority, we woke up yesterday to a raft of new taxes.
Among other items, VAT has been increased, as has the price of stamps on phone bills, judicial records and receipts. Public notary fees have been doubled and tax on cement and construction licences have gone up. Income tax will be “adjusted” and there is a new levy on anyone leaving the country, depending on the class of ticket. The income tax change is going to go down like a lead balloon, especially as there was no change to the salaries of MPs, ministers and the troika of senior positions – the president, the prime minister and the speaker of parliament – which, with benefits and pensions, comes to a whopping estimated US$50 million annually.
Apparently there’s easily an extra $1 billion in all that, although that figure could probably be found if the state simply managed more efficiently the collection of levies from existing entities – electricity comes to mind – but that’s clearly too much trouble.
Back to the budget. How, you ask, was the country able to function for the past 12 years if there was no consensus on how to allocate the contents of the state coffers? A friend who used to work at the ministry of economy explained what happened since 2005, the year of the Cedar Revolution: “The country functioned by replicating the 2005 budget and voting in additional funding on an exceptional basis. It was a total mess.”
You don’t say. But why the reluctance? Surely even a government as bonkers as Lebanon’s needed to decide how much it costs to run the country and make an effort to balance the books. “To my knowledge the ministry of finance drafted a budget each year,” she said, “but [the] March 8 [bloc] continuously refused to vote on any of them because they accused former March 14 [bloc] ministers of finance such as Jihad Azour and Raya Al Hassan of corruption and asked them to explain certain extra budgetary spending.” Both left office years ago, Mr Azour in 2008 and Ms Al Hassan in 2011, but by then the anti-budget policy was cemented in lore.
Indeed, anyone familiar with the working of the Lebanese mind, and the fog of suspicion and paranoia that can cloud it at a second’s notice, will know that that’s all it took to indefinitely jam any national process. Mr Azour, now the IMF’s director of the Middle East and Central Asia department, and Ms Al Hassan were very capable technocrats and the accusations were probably stirred up to divide an already polarised country.
But what of the people? Surely over the past 12 years they should have demanded that the state be accountable, that the government, of which there have now been five since the last budget, outline what it’s going to spend on as well as what is and what’s not being taxed. But there wasn’t one comprehensive plan on how the country was financed and no genuine debate on growth predictions, public borrowing, personal taxation, savings and pensions, business rates and taxation, banking, education and health. Meanwhile most of us lost interest.
So why was this year any different? It is true that this recent government was formed amid a mood of newly found national unity but we have been here before, most recently in 2008, when March 14 and March 8 kissed and made up at a Qatari-sponsored meeting in Doha, hastily arranged after March 8 sent its gunmen on to the streets to overthrow the government.
No, this year it appears the long-demanded pay rise from public sector employees could no longer be ducked and the state had to find $800m and decided it could only do this by taxation. This may be a bitter pill for the Lebanese to swallow as most see the public sector as bloated, lazy and riddled with unqualified sectarian appointees.
But on balance, any budget is an achievement. Lebanon, which we forget has a public debt of more than $74 billion, over one-and-a-half times its GDP, needed to get a grip on state finances.
Michael Karam is a freelance writer who lives between Beirut and Brighton.
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UAE squad
Ali Kashief, Salem Rashid, Khalifa Al Hammadi, Khalfan Mubarak, Ali Mabkhout, Omar Abdelrahman, Mohammed Al Attas (Al Jazira), Mohmmed Al Shamsi, Hamdan Al Kamali, Mohammad Barghash, Khalil Al Hammadi (Al Wahda), Khalid Eisa, Mohammed Shakir, Ahmed Barman, Bandar Al Ahbabi (Al Ain), Adel Al Hosani, Al Hassan Saleh, Majid Suroor (Sharjah), Waleed Abbas, Ismail Al Hammadi, Ahmed Khalil (Shabab Al Ahli Dubai) Habib Fardan, Tariq Ahmed, Mohammed Al Akbari (Al Nasr), Ali Saleh, Ali Salmeen (Al Wasl), Hassan Al Mahrami (Baniyas)
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Tips to keep your car cool
- Place a sun reflector in your windshield when not driving
- Park in shaded or covered areas
- Add tint to windows
- Wrap your car to change the exterior colour
- Pick light interiors - choose colours such as beige and cream for seats and dashboard furniture
- Avoid leather interiors as these absorb more heat
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
MO
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Killing of Qassem Suleimani
Killing of Qassem Suleimani
THE SPECS
Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
Torque: 780Nm
Transmission: 8-speed automatic
Price: From Dh1,350,000
On sale: Available for preorder now
If you go
The flights
Etihad and Emirates fly direct from the UAE to Chicago from Dh5,215 return including taxes.
The hotels
Recommended hotels include the Intercontinental Chicago Magnificent Mile, located in an iconic skyscraper complete with a 1929 Olympic-size swimming pool from US$299 (Dh1,100) per night including taxes, and the Omni Chicago Hotel, an excellent value downtown address with elegant art deco furnishings and an excellent in-house restaurant. Rooms from US$239 (Dh877) per night including taxes.
Bombshell
Director: Jay Roach
Stars: Nicole Kidman, Charlize Theron, Margot Robbie
Four out of five stars
Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Multitasking pays off for money goals
Tackling money goals one at a time cost financial literacy expert Barbara O'Neill at least $1 million.
That's how much Ms O'Neill, a distinguished professor at Rutgers University in the US, figures she lost by starting saving for retirement only after she had created an emergency fund, bought a car with cash and purchased a home.
"I tell students that eventually, 30 years later, I hit the million-dollar mark, but I could've had $2 million," Ms O'Neill says.
Too often, financial experts say, people want to attack their money goals one at a time: "As soon as I pay off my credit card debt, then I'll start saving for a home," or, "As soon as I pay off my student loan debt, then I'll start saving for retirement"."
People do not realise how costly the words "as soon as" can be. Paying off debt is a worthy goal, but it should not come at the expense of other goals, particularly saving for retirement. The sooner money is contributed, the longer it can benefit from compounded returns. Compounded returns are when your investment gains earn their own gains, which can dramatically increase your balances over time.
"By putting off saving for the future, you are really inhibiting yourself from benefiting from that wonderful magic," says Kimberly Zimmerman Rand , an accredited financial counsellor and principal at Dragonfly Financial Solutions in Boston. "If you can start saving today ... you are going to have a lot more five years from now than if you decide to pay off debt for three years and start saving in year four."
Fixtures
Wednesday
4.15pm: Japan v Spain (Group A)
5.30pm: UAE v Italy (Group A)
6.45pm: Russia v Mexico (Group B)
8pm: Iran v Egypt (Group B)
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Rooney's club record
At Everton Appearances: 77; Goals: 17
At Manchester United Appearances: 559; Goals: 253
COMPANY%20PROFILE
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