The Council of Ministers (COM) approved on 28/2/2024 a new package of public wages, retroactive to 1/12/2023. The new package increases wages on a monthly basis by three times the basic salary to ALL retirees, and by 3 times as well to active members of the security and armed forces, and by two times to active members of the public administrations. As a result, all public employees will be getting a total of nine times their basic salaries.
Additional features of the new package include:
– The increase to retirees should be at least 8 million LBP.
– Active members of the security and armed forces will get 9 million LBP as transportation allowance.
– Active members of the public administrations will get between 8 and 16 gasoline tanks (depending on rank) as transportation allowance, at 1.5 million LBP for each tank, provided they come to work 18 days a month (4 days a week).
– Moreover, active members of the public administrations will get a monthly productivity allowance between 150 and 250 USD.
– Overall, it is estimated that public retiree’s monthly salaries (at 89,500 LBP per USD) will end up between 230 and 900 USD; and for public active members between 400 and 1200 USD.
More important, the increase in wages is expected to cost around 3 trillion LBP, making the total monthly wage bill at about 10 trillion LBP. And as these will be paid in USD, they will cost BDL about 111 million USD each month. Add to them the cost of Circular 158 at 40 million USD, then the cost of these two arrangements will be at least a monthly 150 million USD. That is quite a challenge to BDL, especially in a turbulent political and security environment, in addition to the burden of stabilizing the exchange rate and monetary aggregates. As such, all that will hinge on whether USD inflows (from remittances, tourists, international organizations, etc.. ) keep pouring in and on tax revenues keep going up.
Lastly, still, the new package is a measured and considerate one, and it is a far cry from the disastrous package approved in 2017, when public wages increased by 50% to 100% and contributed vastly to the growth in public debt, loss of FX reserves, and headwinds to the current crisis.