Beirut, Lebanon

1
Economic IMC Ministry of Finance Commitment
Document
Beirut, Lebanon June 15, 2014
2
Ministry of Finance Commitment Document

• The Minister of Finance commits to the timely
  implementation of the following programs
• Program FIN-001 Rationalize expenditures (Aug.
  2001 Dec. 2011) the program objectives are to
  reduce waste and increase the effectiveness and
  productivity of spending, and to rationalize
  non-interest expenditures, contain the wage bill,
  and reform public sector enterprises
• Program FIN-002 Enhance revenues (Oct. 2006
  Dec. 2011) the program objectives are to
  undertake revenue enhancing measures through
  improving tax structure and collection, guided by
  the need to minimize distortions and enhancing
  equity and fairness in the distribution of tax
  burden and enhance revenue collection from
  government properties
• Program FIN-003 Undertake budget and financial
  management reform (Oct. 2006 Dec. 2011) the
  program objectives are to develop a modern Budget
  System Law (BSL) which will be the anchor for all
  reform measures, enhance public expenditure
  management with more accountability and
  transparency, enhance institutional capacity,
  improve regulatory framework, and improve fiscal
  reporting
• Program FIN-004 Undertake revenue management and
  administrative reform toward a function-based
  structure (Jan. 2006 Dec. 2010) the program
  objectives are to improve formulation and
  implementation of fiscal policy, enhance equity
  and fairness in the distribution of the tax
  burden, implement good governance, undertake
  structural measures aimed at modernizing the
  revenue administration towards function based
  structure with full strong headquarters, fully
  automated business processes, risk based
  compliance programs and skilled and professional
  staff
• Program FIN-005 Strengthen Debt Management with
  the aim to reduce the costs and risks of the
  government's debt portfolio (Jul. 2003 Dec.
  2011) the program objectives are to strengthen
  debt management with the aim to reduce the costs
  and risks of the government's debt portfolio

3
Ministry of Finance Commitment Document
(Contd)

• Program FIN-006 Reform capital markets (Jan.
  2008 Dec. 2008) the program objectives are to
  develop Lebanon's capital markets
• Program FIN-007 Improve the business environment
  (Apr. 2005 Dec. 2011) the program objectives
  are to improve the business environment and
  reduce the cost of doing business in Lebanon,
  improve the competitiveness and employment
  creation, and encourage the recovery of the
  private sector in the aftermath of the Israeli
  war
• Program FIN-008 Facilitate trade (Jan. 2008
  Dec. 2008) the program objectives are to
  facilitate imports, lower related costs, and
  automate operations at Beirut port
• Note Detailed supporting documents are attached
  in the appendix

Signature
Signature
H.E. PRESIDENT OF COUNCIL OF MINISTERS
H.E. MINISTER OF FINANCE
Date
2007
Date
2007
4
Ministry of Finance Program Charter 1
Program Owner
Minister of Finance
Program Title
Rationalize expenditures
Key Stakeholders
Ministry of Energy and Water, CDR, Higher Relief
Council, PCM
Program Number
FIN-001
Program Objectives/Description
High Level Work Plan

• Reduce waste and increase the effectiveness and
  productivity of spending
• Rationalize non-interest expenditures, containing
  the wage bill, and reforming public sector
  enterprises, especially EDL.

• Revise the salary and benefits structure for some
  public officials
• Extend the working hours in the public sector
  from 32 hours a week to at least 36
• Reduce travel and communication expenses
• Work on phasing out the Council of the South
  and the Fund for the Displaced
• Contain the wage bill in the medium term through
  reducing the size of the public sector by
  attrition and by limited hiring
• Reduce the budgetary cash transfer to EDL through
  adoption of the Power Sector Reform Plan.
• Maintain the quality of infrastructure and invest
  in high-value projects while reducing the cost of
  funding.

Key Risks

• Requires Parliament approval for some measures
• Security issues (potential increase in military
  spending)
• Any further increase in fuel prices

Milestones

• (i) Wages and salary dynamics controlled by
  restricting recruitment to essential position
• (ii) Decision not to replace one for one civil
  servants that retire and replaced by more junior,
  less expensive staff
• (iii) Transfer of 500 million from 2007 to 2009
  to the COS DF after which they are assumed to
  be closed

Requirements
Description
Technical Assistance
Budget

• Available Budget -
• Complementary Budget -
• TOTAL BUDGET -

KPIs
Target

• Level of spending versus EPCA target

• Primary expenditures to meet EPCA targets for all
  quarters

Ministry Team
5
Ministry of Finance Paris III Program 1
Initiatives
List of Programs and Initiatives
Sector Programs and Initiatives- Sector Programs and Initiatives- Sector Programs and Initiatives- Stakeholders Timeline Timeline Implementation Priority
1. Rationalize expenditures Rationalize expenditures 16/8/2001 30/12/2011
1a. Revise the salary and benefits structure for some public officials MoF 1/1/2008 30/12/2011 M
1b. Save on transportation allowances through extending the working hours in the public sector from 32 hours a week to at least 36 MoF 1/1/2008 30/12/2011 M
1c. Reduce travel and communication expenses MoF 1/5/2007 31/12/2007 S
1d. Work on terminating the Council of the South and the Fund for the Displaced MoF 16/8/2001 31/12/2009 S
1e. Contain the wage bill in the medium term through reducing the size of the public sector by attrition and by limited hiring MoF 16/2/2004 31/12/2010 S
1f. Reduce the budgetary cash transfer to EDL through adoption of the Power Sector Reform Plan MoF, MoEW, PCM 1/1/2008 30/12/2011 M
1g. Submit to Parliament a draft 2007 budget law consistent with the targeted primary balance of the central government and including detailed HRC operations and CDR foreign-financed expenditures (EPCA) MoF, CDR, HRC 1/1/2008 2/4/2008 L
1h. Maintain the quality of infrastructure and invest in high-value projects, while reducing the cost of funding MoF, CDR 1/1/2008 30/12/2011 L
6
Ministry of Finance Program Charter 2
Program Owner
Minister of Finance
Program Title
Enhance revenues
Key Stakeholders
Program Number
FIN-002
Program Objectives/Description
High Level Work Plan

• Undertake revenue enhancing measures through
  improving tax structure and collection, guided by
  the need to minimize distortions and enhancing
  equity and fairness in the distribution of tax
  burden and enhance revenue collection from
  government properties

• Settle the seashore violation issue and start
  collecting rent on infringed properties
• Lift the cap on domestic car gasoline prices
• Enhance revenue collection from public properties
  namely Casino du Liban
• Increase the VAT rate from 10 to 12 in 2008 and
  from 12 to 15 in 2010
• Collect the 5 percentage points additional VAT on
  water, electricity and telecom
• Adopt monthly VAT filing for large corporations
  for improved cash management
• Increase the tax on interest income from 5
  percent to 7 percent
• Introduce the Global Income Tax
• Strengthen the Built Property Tax administration

Key Risks

• Council of Ministers decisions and Parliaments
  approval

Milestones

• (i) Settlement of seashore violations
• (ii) Uncapping mechanism proposed and approved by
  Council of Ministers and hence came into effect
• (iii) VAT increased from 10 to 12 in 2008 and
  then from 12 to 15 in 2010
• (iv) Interest income increased from 5 to 7
• (v) GIT introduced
• (vi) Comprehensive database on build properties
  built and updated

Requirements
Description
Technical Assistance
Budget

• Available Budget -
• Complementary Budget -
• TOTAL BUDGET -

KPIs
Target

• Tax and non-tax revenues versus EPCA projections

• Revenues to meet EPCA targets for all quarters

Ministry Team
7
Ministry of Finance Paris III Program 2
Initiatives
List of Programs and Initiatives
Sector Programs and Initiatives- Sector Programs and Initiatives- Sector Programs and Initiatives- Stakeholders Timeline Timeline Implementation Priority
2. Enhance revenues Enhance revenues 2/10/2006 31/12/2011
2a. Settle the seashore violation issue and start collecting rent on infringed properties MoF 1/10/2008 31/12/2008 M
2b. Lift the cap on domestic car gasoline prices (EPCA), through issuing a Council of Ministers resolution/decree setting a specific floor on gasoline excise of LL 300 per liter of gasoline and gradually increase excise tax rate MoF 1/1/2008 31/12/2011 L
2c. Enhance revenue collection from public properties namely Casino du Liban MoF 1/1/2007 31/12/2011 S
2d. Increase the VAT rate from 10 to 12 in 2008 and from 12 to 15 in 2010. MoF 1/1/2008 31/12/2010 M
2e. Collect the 5 percentage points additional VAT on water, electricity and telecommunication. MoF 1/1/2008 31/12/2010 L
2f. Adopt monthly VAT filing for large corporations for improved cash management MoF 1/1/2008 31/12/2010 M
2g. Increase the tax on interest income from 5 percent to 7 percent MoF 1/1/2008 31/12/2008 M
2h. Introduce the Global Income Tax to replace the current scheduler income tax system MoF 1/10/2009 31/12/2009 L
2i. Strengthen the Built Property Tax administration through building a comprehensive database on built properties MoF 2/10/2006 31/12/2007 S
8
Ministry of Finance Program Charter 3
Program Owner
Minister of Finance
Program Title
Undertake budget and financial management reform
Key Stakeholders
Spending agencies, Concerned ministries
Program Number
FIN-003
Program Objectives/Description
High Level Work Plan

• Develop a modern Budget System Law (BSL) which
  will be the anchor for all reform measures
• Enhance public expenditure management with more
  accountability and transparency
• Enhance institutional capacity
• Improve regulatory framework
• Improve fiscal reporting

• Reform the budget preparation process and linking
  it to Macro fiscal framework
• Increase budget coverage
• Reform Treasury Operations
• Prepare a Budget System Law to encompass all
  the reform measures
• Adopt fiscal accountability law
• Build capacity within the different directorates
  involved in the expenditure cycle

Key Risks
Milestones

• Requires Parliament approval for some measures
• Political risks
• Cooperation of spending agencies

• (i) Top-down approach to reform the budget
  preparation process adopted (ii) Budget laws
  issued with medium term expenditure frameworks
  (MTEF) attached
• (iii) Budget ceilings set per ministry in
  accordance with sector
• priorities
• (iv) Budget coverage extended and CDR other
  extra budgetary
• spending consolidated within the budget
• (v) Performance budgeting introduced

Requirements
Description
Technical Assistance
KPIs
Target

• Budget preparation linked to a medium term
  expenditure framework (MTEF)
• Number of line ministries adopting new budget
  approach

• Budget that reflects sector priorities and done
  within 3 year-framework, calculates cost of
  producing outcomes, and solves issues of
  appropriations and carryovers, complementary
  period and treasury advances
• All line ministries

Budget

• Available Budget -
• Complementary Budget -
• TOTAL BUDGET -

Ministry Team
9
Ministry of Finance Paris III Program 3
Initiatives
List of Programs and Initiatives
Sector Programs and Initiatives- Sector Programs and Initiatives- Sector Programs and Initiatives- Stakeholders Timeline Timeline Implementation Priority
3. Undertake budget and financial management reform Undertake budget and financial management reform 01/01/2007 31/12/2011
3a. Adopt a top-down approach to reform the budget preparation process MoF 1/1/2007 31/12/2001 S
3b. Link the budget preparation to a medium-term expenditure framework (MTEF) prepared by MoF MoF 1/1/2007 31/12/2001 S
3c. Prepare MTEF in coordination with spending agencies MoF, Spending agencies 1/1/2007 31/12/2001 S
3d. Submit to Parliament a draft 2007 budget law consistent with the targeted primary balance of the central government and including detailed HRC operations and CDR foreign-financed expenditures (EPCA) MoF 1/6/2007 30/6/2007 S
3e. Extend the budget coverage and consolidate CDR spending and other extra budgetary entities within the budget MoF 1/6/2007 27/2/2009 S
3f. Prepare for introduction of performance budgeting MoF, Concerned ministries 1/1/2008 31/12/2011 S
3g. Improve cash management through establishing cash management unit, upgrade the IT system to accommodate this reform, restructure the treasury functions and link debt to cash management MoF 1/1/2008 31/12/2008 M
10
Ministry of Finance Paris III Program 3
Initiatives
List of Programs and Initiatives
Sector Programs and Initiatives- Sector Programs and Initiatives- Sector Programs and Initiatives- Stakeholders Timeline Timeline Implementation Priority
3h. Prepare the introduction of a Treasury Single Account (TSA) through working on the necessary legislations and decrees required for managing the TSA (awaiting enactment as the draft is already in Parliament) MoF 1/1/2008 30/12/2008 M
3i. Prepare a Budget System Law to encompass all the reform measures MoF 1/1/2008 31/12/2011 M
3j. Adopt a fiscal accountability law MoF 1/1/2008 30/12/2008 L
3k. Build the capacity within the different directorates involved in the expenditure cycle 1) improving the analytical capacity of the budget directorate to meet the requirements of the new budget preparation approach.2) Improve the cash management skills of the treasury directorate MoF 1/1/2008 30/12/2011 L
11
Ministry of Finance Program Charter 4
Program Owner
Minister of Finance
Program Title
Undertake revenue mgt and administrative reform
toward a function-based structure
Key Stakeholders
Program Number
FIN-004
Program Objectives/Description
High Level Work Plan

• Improve formulation and implementation of fiscal
  policy
• Enhance equity and fairness in the distribution
  of the tax burden
• Implement good governance
• Undertake Structural measures aimed at
  modernizing the revenue administration towards
  function based structure with full strong
  headquarters, fully automated business processes,
  risk based compliance programs and skilled and
  professional staff

• Reorganize regional tax offices along function
  based operations
• Establish taxpayer services in satellite offices
• Introduce the "Tax Procedure Code" that unifies
  and harmonizes the various tax procedures
• Finalize the draft law for introducing a Global
  Income Tax (GIT) to replace the current schedular
  income tax system , and work in progress for the
  development of related regulations and procedures
• Introduce electronic registration of taxpayers
• Put in place a new audit strategy based on risk
  selection criteria, new audit techniques and
  procedures, and develop an audit manual
• Integrate built property data systems between
  Land registry at Cadastre and Built Property
  Administration
• Provide tax incentives for affected enterprises

Key Risks

• Political environment

Milestones

• Regional tax offices reorganized
• Taxpayer services in satellite offices
  established
• Tax Procedure Code introduced
• Draft law for introducing the Global Income Tax
  finalized
• E-registration introduced
• New audit strategy developed
• Comprehensive database on built properties
  developed and updated
• Tax incentives for affected enterprises provided

Requirements
Description
Technical Assistance

• Tax reform project team-UNDP

Budget

• Available Budget -
• Complementary Budget -
• TOTAL BUDGET -

KPIs
Target
Ministry Team

• All the Revenue Directorate employees

• Higher compliance rate
• Improved services
• Increased revenues collection

• Increased
• Improved
• Increased

12
Ministry of Finance Paris III Program 4
Initiatives
List of Programs and Initiatives
Sector Programs and Initiatives- Sector Programs and Initiatives- Sector Programs and Initiatives- Stakeholders Timeline Timeline Implementation Priority
4. Undertake revenue management and administrative reform toward a function-based structure Undertake revenue management and administrative reform toward a function-based structure 2/1/2006 31/12/2010
4a. Reorganize revenue administration along a function based structure with strong headquarters MoF 1/1/2008 31/12/2008 M
4b. Reorganize regional tax offices along function based operations MoF 2/1/2006 31/12/2007 S
4c. Establish taxpayer services in satellite offices MoF 2/7/2007 31/12/2007 S
4d. Expand large taxpayers office (LTO) coverage to include other taxes and fees MoF 1/1/2008 31/12/2010 M
4e. Reinforce the large taxpayers office (LTO) with new automated procedures. MoF 1/1/2008 31/12/2010 M
4f. Establish a unit for medium taxpayers (MTO) and potentially develop a simplified scheme for the small taxpayers MoF 1/1/2008 31/12/2010 M
4g. Finalize the development of the comprehensive database of employees, and extend the reformed operations to regional offices within DASS reform context of wages and salaries tax department MoF 1/1/2008 31/12/2010 M
4h. Reinforce the newly established Tax roll department MoF 1/1/2008 31/12/2010 M
4i. Introduce the "Tax Procedure Code" that unifies and harmonizes the various tax procedures MoF 3/4/2006 31/12/2007 S
4j. Update "Stamp Fees" law to increase its fairness and facilitate its application MoF 1/1/2008 31/12/2010 L
13
Ministry of Finance Paris III Program 4
Initiatives
List of Programs and Initiatives
Sector Programs and Initiatives- Sector Programs and Initiatives- Sector Programs and Initiatives- Stakeholders Timeline Timeline Implementation Priority
4k. Finalize the draft law for introducing a Global Income Tax (GIT) to replace the current schedular income tax system , and work in progress for the development of related regulations and procedures MoF 2/10/2006 30/9/2008 S
4l. Introduce electronic registration of taxpayers MoF 3/4/2006 30/12/2007 S
4m. Launch electronic filing (e-filing) and electronic payment (e-payment through commercial banks) MoF 1/1/2008 30/12/10 M
4n. Rely on mail services to simplify taxpayers filing obligations MoF 1/1/2008 30/12/2008 M
4o. Modernize and streamline operations and automate the various processes and procedures MoF 1/1/2008 30/12/2008 L
4p. Put in place a new audit strategy based on risk selection criteria, new audit techniques and procedures, and develop an audit manual MoF 2/1/2007 31/12/2007 S
4q. Integrate built property data systems between Land registry at Cadastre and Built Property Administration MoF 2/10/2006 31/12/2007 S
4r. Improve collections of receivables so as to reduce accumulation of revenue arrears MoF 1/1/2008 0/12/2008 L
4s. Implement Tax Procedure Code - Prepare executive regulations and procedures - Prepare and disseminate new audit manual - Create independent appeal/ review body with public and private sector participation for appeals of tax audits MoF 1/1/2008 31/12/2008 M
14
Ministry of Finance Paris III Program 4
Initiatives
List of Programs and Initiatives
Sector Programs and Initiatives- Sector Programs and Initiatives- Sector Programs and Initiatives- Stakeholders Timeline Timeline Implementation Priority
4t. Simplify stamp tax compliance and limit application to major revenue sources Extend declaration period MoF 1/1/2008 31/12/2008 L
4u. Determine alternative and more efficient sources of revenue to stamp tax MoF 1/1/2008 31/12/2008 M
4v. Eliminate stamp tax MoF 1/1/2009 31/12/2009 L
4w. Reduce tax penalties for small irregularities MoF 1/1/2008 31/12/2008 M
4x. Simplify further the tax procedures and reduce the number of separate taxes and fees while preserving neutral fiscal impact MoF 1/1/2008 31/12/2008 M
4y. Provide tax incentives for affected enterprises MoF 3/7/2006 31/12/2007 S
4z. Harmonize tax treatment of SARL and SALs MoF 1/1/2008 31/12/2008 M
4aa. Continue to strengthen, follow-up on complaint mechanism for VAT MoF 1/1/2008 31/12/2008 M
4ab. Enhance Revenue Collection through improved communication with taxpayers and improved taxpayers' services MoF 1/1/2008 30/12/2011 L
15
Ministry of Finance Program Charter 5
Program Owner
Minister of Finance
Program Title
Strengthen debt management
Key Stakeholders
BDL, Parliament
Program Number
FIN-005
Program Objectives/Description
High Level Work Plan

• Strengthen Debt Management with the aim to reduce
  the costs and risks of the government's debt
  portfolio

• Improve debt reporting and transparency and
  publish quarterly debt publications
• Formalize and enhance coordination between MoF
  and BDL by creating a Higher Council for debt
  Management
• Enact the currently existing draft law in
  Parliament to modernize debt management
• Develop a formal debt management strategy
• Develop secondary market liquidity in LL by
  introducing longer maturity instruments
• Star modifying T-bill auction frequency and
  procedures

Key Risks

• Economic environment risk
• Political risk
• Institutional risk

Milestones

• (i) Specialized Regular Debt Reporting that
  supplements Public Finance
• Monitor and provides timely detailed debt
  information
• (ii) Creation of a Higher Council for Debt
  Management
• (iii) Debt Management Strategy

Requirements
Description
Technical Assistance
KPIs
Target
Budget

• Available Budget -
• Complementary Budget -
• TOTAL BUDGET -

• Improved debt reporting
• Creation of Higher Council for Debt Management.
• Background analysis for the formal debt
  management strategy

• Report on debt and debt markets published on
  quarterly base
• Higher Council for Debt Management created
• Debt management strategy completed

Ministry Team
16
Ministry of Finance Paris III Program 5
Initiatives
List of Programs and Initiatives
Sector Programs and Initiatives- Sector Programs and Initiatives- Sector Programs and Initiatives- Stakeholders Timeline Timeline Implementation Priority
5. Strengthen debt management Strengthen debt management 10/07/2003 30/12/2011
5a. Improve debt reporting and transparency and publish quarterly debt publications MoF 1/1/2007 30/12/2011 S
5b. Formalize and enhance coordination between MoF and BDL by creating a Higher Council for debt management MoF, BDL 1/1/2008 31/12/2008 M
5c. Enact the currently existing draft law in Parliament to modernize debt management MoF, Parliament 1/1/2008 31/12/2008 L
5d. Develop a formal debt management strategy MoF 1/1/2008 31/12/2008 M
5e. Develop secondary market liquidity in LL by introducing longer maturity instruments MoF 10/7/2003 30/12/2011 S
5f. Start modifying T-bill auction frequency and procedures MoF 1/1/2008 30/6/2009 L
17
Ministry of Finance Program Charter 6
Program Owner
Minister of Finance
Program Title
Reform capital markets
Key Stakeholders
BSE, Parliament
Program Number
FIN-006
Program Objectives/Description
High Level Work Plan

• Develop Lebanon's capital markets

• Enhance the functioning of BSE, launch a new
  website for the BSE and introduce E-trading
• Enhance trading of share of unlisted companies on
  BSEs trading floor
• Setup the Capital Market Authority organizational
  structure
• Issue detailed regulations under the Capital
  Markets law by the Capital Markets authority
• Set up the Capital Markets Commission including
  specialized financial court
• Enact the following draft laws The
  Dematerialization of Securities law, the
  Securities Lending law and the Insider
  Trading law and the capital Markets law.
• Transfer regulatory responsibilities for the BSE
  from MoF to capital markets commission
• Transfer regulatory responsibility for listing
  securities on stock exchanges from the BSE to
  capital markets commission
• Address aspects of policy and Capital Market
  development such as privatization of the BSE
• Develop an Official Stock Market Index

Key Risks

• Political risk
• Institutional risk

Requirements
Description
Technical Assistance
Milestones

• Passage of Capital Markets Law and other laws
  listed above by Parliament
• Setting up the Capital Markets Authority
• Drafting the Regulations for the Capital Markets
  Authority

Budget

• Available Budget -
• Complementary Budget -
• TOTAL BUDGET -

KPIs
Target
Ministry Team

• Passage of Capital Markets Law

• Completed (Dec. 2007)

18
Ministry of Finance Paris III Program 6
Initiatives
List of Programs and Initiatives
Sector Programs and Initiatives- Sector Programs and Initiatives- Sector Programs and Initiatives- Stakeholders Timeline Timeline Implementation Priority
6. Reform capital markets Reform capital markets 1/1/2008 31/12/2008
6a. Enhance the functioning of BSE, launch a new website for the BSE and introduce E- trading MoF, BSE 1/1/2008 31/12/2008 M
6b. Enhance trading of shares of unlisted companies on BSE's trading floor MoF, BSE 1/1/2008 31/12/2008 M
6c. Setup the Capital Market Authority organizational structure MoF 1/1/2008 31/12/2008 L
6d. Issue detailed regulations under the "Capital Markets" law by the Capital Market authority MoF 1/1/2008 31/12/2008 L
6e. Setup the "Capital Markets Commission", including a specialized financial court MoF 1/1/2008 31/12/2008 L
6f. Enact the following draft laws The "Dematerialization of Securities" law, the "Securities Lending" law, the "Insider Trading" law and the "Capital Markets law MoF, Parliament 1/1/2008 31/12/2008 L
6g. Transfer regulatory responsibilities for the BSE from MoF to capital markets commission MoF 1/1/2008 31/12/2008 L
6h. Transfer regulatory responsibility for listing securities on stock exchanges from the BSE to capital markets commission MoF 1/1/2008 31/12/2008 L
6i. Address aspects of policy and Capital Market development such as privatization of the BSE MoF 1/1/2008 31/12/2008 L
6j. Develop an Official Stock Market Index MoF 1/1/2008 31/12/2008 L
19
Ministry of Finance Program Charter 7
Program Owner
Minister of Finance
Program Title
Improve the business environment
Key Stakeholders
Ministry of Economy and Trade, Kafalat, BDL
Program Number
FIN-007
Program Objectives/Description
High Level Work Plan

• Improve the business environment and reduce the
  cost of doing business in Lebanon
• Improve the competitiveness and creating
  employment
• Encourage the recovery of the private sector in
  the aftermath of the Israeli war

• Remove mandatory stamping of books and require
  international accounting standards
• Expand the role of Kafalat to encompass more
  economic sectors and raise the ceiling of
  guaranteed loans to LL 600 million
• Promote the creation of venture capital funds to
  facilitate financing

Key Risks
Milestones

• (i) Measures to facilitate access to Kafalat
  loans identified
• (ii) Ceiling of guaranteed loan raised to LL 600
  million
• (iii) Previous loans for SMEs affected by the war
  rescheduled and additional grace period granted
• (iv) Implementation of capital re-injection to
  replace damaged equipment
• (v) BADER investments initiated

Requirements
Description
Technical Assistance
KPIs
Target

• Relation facilitation between MoF and business
  community

• Laws and decisions clarifying fiscal procedures
  set and enacted

Budget

• Available Budget -
• Complementary Budget -
• TOTAL BUDGET -

Ministry Team
20
Ministry of Finance Paris III Program 7
Initiatives
List of Programs and Initiatives
Sector Programs and Initiatives- Sector Programs and Initiatives- Sector Programs and Initiatives- Stakeholders Timeline Timeline Implementation Priority
7. Improve the business environment Improve the business environment 1/4/2005 31/12/2011
7a. Remove mandatory stamping of books, and require international accounting standards MoF, MoET 1/1/2008 31/12/2008 M
7b. Expand the role of Kafalat to encompass more economic sectors, and raise the ceiling of guaranteed loans to LL 600 million MoF, Kafalat, BDL, MoET 1/4/2005 31/12/2007 S
7c. Promote the creation of venture capital funds to facilitate financing MoF, MoET 2/10/2006 31/12/2011 S
21
Ministry of Finance Program Charter 8
Program Owner
Minister of Finance
Program Title
Facilitate trade
Key Stakeholders
Ministry of Economy and Trade
Program Number
FIN-008
Program Objectives/Description
High Level Work Plan

• Facilitate imports
• Automate operations at Beirut port
• Lower import costs

• Expedite the clearance of imports, by increasing
  automation at the port, and lowering the related
  cost. A one-stop-shop at the Port of Beirut will
  provide better services to trade and export

Key Risks
Milestones

• Revised import processes implemented
• One stop shop created at the Port of Beirut

Requirements
Description
Technical Assistance
KPIs
Target
Budget

• Available Budget -
• Complementary Budget -
• TOTAL BUDGET -

• N/A

• N/A

Ministry Team
22
Ministry of Finance Paris III Program 8
Initiatives
List of Programs and Initiatives
Sector Programs and Initiatives- Sector Programs and Initiatives- Sector Programs and Initiatives- Stakeholders Timeline Timeline Implementation Priority
8. Facilitate trade Facilitate trade 1/1/2008 31/12/2008
8a. Expedite the clearance of imports, by increasing automation at the port, and lowering the related cost. A one-stop-shop at the Port of Beirut will provide better services to trade and export MoF (Customs), MoET 1/1/2008 31/12/2008 M
23
Appendix

• Detailed Work Plan
• KPIs

24
Appendix

• Detailed Work Plan
• KPIs

25
Rationalize expenditures KPI FIN 001-01
Program Name

• Rationalize expenditures

Formula Parameters Definition

• Current primary expenditures
• Capital expenditures
• Treasury Expenditures

KPI Code

• KPI FIN-001-01

Data Source

• MOF

KPI Type

• Output

Reporting Frequency

• Quarterly

KPI Name

• Level of spending versus EPCA target

Baseline

• EPCA projections (dated March 16th, 2007)

KPI Description
Target

• Primary expenditures to meet EPCA targets for all
  quarters
• Wages and salaries frozen in real terms
• Reduction of the size of public sector by
  attrition
• Savings on transportation allowance
• Decline in Government transfer to EDL as a result
  of power sector reform plan
• Planned phasing out of some extra-budgetary funds
  (Namely COS DF)

Formula

• EPCA projections- actual spending0

Unit

• LBP billion

26
Enhance revenues KPI FIN 002-01
Program Name

• Enhance revenues

Formula Parameters Definition

• Tax revenues
• Non-tax revenues

KPI Code

• KPI FIN-002-01

KPI Type

• Output

Data Source

• MOF

KPI Name

• Tax and non-tax revenues versus EPCA projections

KPI Description
Reporting Frequency

• Quarterly

Formula

• Actual revenues- EPCA projections0

Baseline

• EPCA projections (dated March 16th,2007)

Unit

• LBP billion

Target

• Revenues to meet EPCA targets for all quarters

27
Undertake budget and financial management reform
KPI FIN 003-01
Program Name

• Undertake budget and financial management reform

Formula Parameters Definition

• N/A

KPI Code

• KPI FIN-003-01

Data Source

• MOF
• Line ministries

KPI Type

• Outcome

Reporting Frequency

• Quarterly

KPI Name

• Budget preparation linked to a medium term
  expenditure framework (MTEF)

Baseline

• Budgets currently prepared on a incremental
  basis, within 1 year framework and with little
  planning

KPI Description
Formula

• N/A

Target

• Budget that reflects sector priorities and done
  within 3 year-framework
• Budget that calculates the true cost of producing
  outcomes
• Budget that solves the issue of appropriations
  and carryovers, complementary period and treasury
  advances

Unit

• Completed
• In-progress
• Delayed

28
Undertake budget and financial management reform
KPI FIN 003-02
Program Name

• Undertake budget and financial management reform

Formula Parameters Definition

• N/A

KPI Code

• KPI FIN-003-02

KPI Type

• Outcome

Data Source

• MOF
• Line ministries

KPI Name

• Number of line ministries adopting new budget
  approach where budget preparation is linked to
  medium term expenditure framework (MTEF)

Reporting Frequency

• Quarterly

Baseline

• Ministries prepare their budgets on an
  incremental base and within 1 year framework

KPI Description
Formula

• N/A

Target

• Line ministries preparing their budgets to
  reflect sector priorities and within 3
  year-framework
• Strategies and policies of the spending agencies
  translated into financial framework

Unit

• Completed
• In-progress
• Delayed

29
Undertake revenue management and administrative
reform toward a function-based structure KPI
FIN-004-01
Program Name

• Undertake revenue mgmt and administrative reform
  toward a function-based structure

Formula Parameters Definition

• Number of filers is the number of taxpayers who
  filed a tax return
• Number of taxpayers required to file is the
  number of taxpayers who are required to submit a
  tax return
• Number of payers is the total number of
  taxpayers who paid their tax due liability
• Number of non payers is the number of
  taxpayers who did not pay their tax due liability
• Number of filers who declared an amount gt0 is
  the total number of taxpayers who have a tax due
  liability
• Number of non filers is the number of taxpayers
  who did not file their tax return
• Number of registered taxpayers is the total
  number of registered taxpayers in the Taxroll
• Number of taxpayers having discrepancies is
  the total number of taxpayers having inaccurate
  information in their tax returns

KPI Code

• KPI FIN-004-01

KPI Type

• Outcome

KPI Name

• Higher compliance rate

KPI Description

• Compliance rate enables the MoF to evaluate the
  effectiveness of its new strategies and
  reorganization measures

Formula

• Voluntary compliance rate
• (Number of filers 100 ) / (Number of taxpayers
  required to file) per fiscal period
• (Number of payers 100)/(Number of filers who
  declared an amount gt0) per fiscal period
• Growth rate of the number of registered taxpayers
  per fiscal period (Number of registered
  taxpayers for fiscal period n) -(Number of
  registered taxpayers for fiscal period n-1)100/
  (Number of registered taxpayers for fiscal period
  n-1)
• Enforcement
• Number of filers after follow-up 100 ) / (Total
  number of non filers before follow-up) per fiscal
  period
• (Number of payers after follow-up 100)/(Number
  of non payers before follow-up) per fiscal period
• Decreasing rate of discrepancies
• (Number of taxpayers having discrepancies for
  fiscal period n-1) - (Number of taxpayers having
  discrepancies for fiscal period n)100/ (Number
  of taxpayers having discrepancies for fiscal
  period n-1)

Data Source

• SIGTAS the system of the Ministry of Finance

Reporting Frequency

• Annually
• Quarterly

Baseline

• Voluntary compliance rate
• of filers95 (VAT Q4 2006)
• of payers96 (VAT Q4 2006)
• Growth rate of the nb of registered
  taxpayers2.5 (VAT Q3-Q4 2006)
• Enforcement
• of filers after follow-up4.5 (VAT Q4 2006)
• of payers after follow-up36 (VAT Q4 2005)
• Decreasing rate of discrepancies 34 (VAT Q1-Q2
  2006)

Unit

Target

• 2007 xx
• 2008 xx
• 2009 xx

30
Undertake revenue management and administrative
reform toward a function-based structure KPI
FIN-004-02
Program Name

• Undertake revenue mgmt and administrative reform
  toward a function-based structure

Data Source

• Ministry of Finance
• INFOPRO

Reporting Frequency

• Annually
• Periodically

KPI Code

• KPI FIN-004-02

KPI Type

• Output

Baseline

• 2006 Transactions processing time 3 days
  (Starting business acquittance)
• 2006 Inquiries processing time 1 day
• April 2007 satisfied taxpayers40
• 2006 0 taxpayers registered in the e-services

KPI Name

• Improved services

KPI Description

• Improved services allows the MoF to evaluate
  the efficiency of the services provided by the
  tax administration

Formula

• Transactions processing time
• Inquiries processing time
• Ratio of satisfied taxpayers Number of
  taxpayers satisfied/population
• (Number of registered taxpayers in the
  e-services100) / Total number of registered
  taxpayers

Target

• Dec. 2007
• Transactions processing time x days
• Inquiries processing time x days
• x satisfied taxpayers
• x taxpayers registered in the e-services
• Dec. 2008
• Transactions processing time x days
• Inquiries processing time x days
• x satisfied taxpayers
• x taxpayers registered in the e-services
• Dec. 2009
• Transactions processing time x days
• Inquiries processing time x days
• x satisfied taxpayers
• x taxpayers registered in the e-services

Unit

• Days

Formula Parameters Definition

• Transactions processing time is the time
  needed by the tax administration to accomplish
  any transaction
• Inquiries processing time is the time needed
  by the tax administration to respond to inquiry
• Taxpayers satisfied are the taxpayers pleased
  with the tax adm. services according to surveys
  undertaken periodically
• population sample taken from the taxpayers
  requesting services
• Number of registered taxpayers in the
  e-services is the total number of registrations
  in e-services

31
Undertake revenue management and administrative
reform toward a function-based structure KPI
FIN-004-03
Program Name

• Undertake revenue mgmt and administrative reform
  toward a function-based structure

Formula Parameters Definition

• Amount recovered from the tax returns is the
  total amount of money collected from taxpayers
  filing their tax returns
• Amount recovered from audit activities is the
  total amount collected following a tax audit
• Amount of arrears recovered is the total amount
  collected of tax liabilities that was not paid by
  the deadline

KPI Code

• KPI FIN-004-03

KPI Type

• Outcome

KPI Name

• Increased revenues collection

Data Source

• SIGTAS the system of the Ministry of Finance

KPI Description

• Increased revenues collection enables the MoF
  to evaluate the effectiveness of its new
  strategies and reorganization measures

Reporting Frequency

• Annually
• Quarterly

Formula

• Growth rate of the amount recovered from the tax
  returns per fiscal period (amount recovered
  from the tax returns for fiscal period n)
  -(amount recovered from the tax returns for
  fiscal period n-1)100/ (amount recovered from
  the tax returns for fiscal period n-1)
• Growth rate of the amount recovered from audit
  activities per fiscal period (amount recovered
  from audit activities for fiscal period n)
  -(amount recovered from audit activities for
  fiscal period n-1)100/ (amount recovered from
  audit activities for fiscal period n-1)
• Decreasing rate of arrears per fiscal period
• (Amount of arrears recovered) 100 / (total
  arrears at the beginning of the fiscal period)
  per fiscal period

Unit

32
Strengthen debt management KPI FIN-005-01
Program Name

• Strengthen debt management

Formula Parameters Definition
KPI Code

• KPI FIN-005-01

KPI Type

• Output Quarterly and monthly debt reports

Data Source

• MOF

KPI Name

• Improve debt reporting

Reporting Frequency

• Quarterly, then monthly

Baseline

• Q II 2007 report on debt and debt markets being
  finalized and to be published by end of August
  2007.

KPI Description

• Publish, first on a quarterly basis, then on a
  monthly basis, a report on Lebanon debt and debt
  markets

Formula
Target

• Report on debt and debt markets published on
  quarterly base

Unit

• Completed
• In progress
• Delayed

33
Strengthen debt management KPI FIN-005-02
Program Name

• Strengthen debt management

Formula Parameters Definition
KPI Code

• KPI FIN-005-02

KPI Type

• Outcome

Data Source

• MOF
• BDL

KPI Name

• Creation of Higher Council for Debt Management

Reporting Frequency

• Annually

Baseline

• Draft law to establish integrated debt management
  unit at MOF and to create Higher Council for Debt
  Management to formalize and enhance coordination
  between MOF BDL awaits parliamentary approval.

KPI Description

• Prepare for the creation of the Higher Council
  for Debt Management

Formula
Target

• Higher Council for Debt Management created

Unit

• Meetings among stakeholders

34
Strengthen debt management KPI FIN-005-03
Program Name

• Strengthen debt management

Formula Parameters Definition
KPI Code

• KPI FIN-005-03

KPI Type

• Outcome

Data Source

• MOF
• Parliament

KPI Name

• Background analysis for a formal debt management
  strategy

Reporting Frequency

• Annually

Baseline

• Preparations for developing a formal debt
  management strategy have been completed with the
  circulation of a quarterly internal financing
  strategy report.

KPI Description

• Conduct background analysis for preparation of a
  formal debt management strategy paper
• Develop a formal debt strategy

Formula
Target

• Debt management strategy completed

Unit

• Completed
• In progress
• Delayed

35
Reform Capital Markets KPI FIN-006-01
Program Name

• Reform capital markets

Formula Parameters Definition
KPI Code

• KPI FIN-006-01

KPI Type

• Output

Data Source
KPI Name

• Passage of Capital Markets Law

Reporting Frequency

• Monthly

Baseline

• July 2007 Delayed

KPI Description
Formula
Target

• Capital market law passed (Completed by Dec. 2007)

Unit

• Completed
• In progress
• Delayed

36
Improve the business environment KPI FIN-007-01
Program Name

• Improve the business environment

Formula Parameters Definition
KPI Code

• KPI FIN-007-01

KPI Type

• Output

Data Source

• MOF
• Business unions

KPI Name

• Relation facilitation between MoF and business
  community

Reporting Frequency

• Quarterly

KPI Description

• Clarify fiscal control procedures
• Accelerate public payment for supplies
• Improve declaration procedures
• Review tax levels and procedures
• Improve access to information

Baseline

• Need to have well defined fiscal procedures

Formula
Target

• Laws and decisions clarifying fiscal procedures
  set and enacted

Unit

• Meetings with representatives of business unions,
  heads of departments at MOF
• Meetings to prepare decisions, laws and
  procedures