Lebanon’s Hariri: ‘Last chance’ for Lebanon to escape economic collapse

Lebanese Prime Minister Saad Hariri says he is optimistic for his country's future. (File/AFP)
Updated 10 February 2019
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Lebanon’s Hariri: ‘Last chance’ for Lebanon to escape economic collapse

  • Hariri admits corruption in Lebanon needs to be tackled
  • Tells World Government Summit that Lebanon is in a "make or break" situation

DUBAI: Lebanon faces its last chance to leave the economic crisis it is currently in, the country’s Prime Minister Saad Al-Hariri said on Sunday.

“We have collective support from all political factions to create reforms and new laws. We have no issues in passing new reforms in government," Hariri said, speaking to a packed conference hall at the World Government summit in Dubai

Hariri said he was optimistic for the country’s future,  but warned: “either we make it or break it.”

Hariri touched on the development reforms and programs that have been set by the CEDRE economic conference in Paris last year that aimed at encouraging foreign investors to trust placing their money in the Mediterranean country, saying that “our new reforms and laws will ensure that we overcome our economic crisis.”

Last year, the global ratings agency Moody’s gave Lebanon’s economy a “low (+)” grade, due to “the deterioration in the regional economic and political environment.” This, and the fear of a real estate collapse, have taken the country to the brink. 

On Thursday, a draft government policy statement set the main policy objectives of Hariri’s national unity government, which committed to bringing down the debt-to-GDP ratio by boosting the size of the economy and reducing the budget deficit.

He also spoke of the need to eliminate corruption, an ever-present thorn that has drained the country over the years. According to the World Economic Forum’s Global Competitiveness Index, Lebanon sits at 120 out of 140 countries in terms of corruption.

"Most importantly for me is to develop a clear program to confront corruption and to make the necessary reforms to support Lebanon economically,” he said.

Lebanon last week formed a government after nine months of political wrangling among politicians over ministerial votes. 

Hariri was also hailed by moderator Emad El-Din Adeeb for his role in pushing women to the forefront, after recently appointing Raya El-Hassan as the country’s Minister of Interior - the first woman to hold such a post in the Arab world.

“Women in Lebanon represent 54 percent of society and not employing them and involving them in the work will be a loss to the GDP,” he said, adding that “I believe women in the Arab world and Lebanon can do a better job than men even.”

Among the audience was Dubai Ruler and UAE’s Vice President and Prime Minister Sheikh Mohammed bin Rashid al Maktoum, who recently revealed in his latest book that he had wanted to make Dubai like Beirut since he visited the city as a child.

When the moderator asked the audience for a show of hands for who wants to visit Lebanon, Sheikh Mohammed raised his.

The Lebanese PM referred to the sectarian strife targeting the region, as a “disease.”

“I am optimistic that the Lebanese youth can rebuild Lebanon the way Rafic Hariri wanted it to be,” he added, referring to his father – the country’s former prime minister who was assassinated 14 years ago. 


Sudan’s economic decline provides fuel for anger against Bashir

Updated 57 sec ago
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Sudan’s economic decline provides fuel for anger against Bashir

  • The recent fuel, cash and bread shortages fueled recent protests in Sudan
  • Protestors blame President Bashir and the ruling National Congress Party for the economic crisis
KHARTOUM: As Samir Gasim reels off the problems facing his Khartoum confectionery and packaging factories, already running well below capacity, the power cuts and generators kick in.
Now he fears the plants may close entirely due to a sudden, eightfold hike in industrial diesel prices imposed by a government desperately short of foreign currency and facing the biggest popular protests since President Omar Al-Bashir came to power 30 years ago.
“We are in favor of eliminating subsidies, but gradually, over five years. Not overnight,” said Gasim, seated in his spartan factory office. “Otherwise it will be a disaster.”
Sudan’s worsening economic crisis has caused fuel, cash and bread shortages that in turn set off a wave of unrest that has surged across the country over the past two months.
The economic slide has also alienated the professional classes, who blame Bashir and the ruling National Congress Party for their troubles, according to businessmen, activists and academics. That has undermined Bashir’s authority and encouraged a protest movement that has persisted despite a security crackdown in which dozens have died.
The Sudanese Professionals’ Association (SPA), which has posted calls for protests on social media and organized strikes, draws in doctors, teachers and lawyers and others complaining of decades of economic mismanagement and isolation.
Founded in 2015, it was planning to submit a request to parliament to raise the base level from which monthly public sector salaries are calculated of 650 Sudanese pounds — now worth just $13.60 at the official exchange rate — on Dec. 25, six days after protests began to escalate.
“We decided to raise the ceiling of our demands from the improvement of wages and the working environment and the right to form professional unions, to demanding the end of the regime,” said Mohamed Yousef, an SPA spokesman and economics professor at Khartoum University.
“There was a big response to us because there is an economic crisis and failure of government, and fuel, bread and liquidity crises.”
Infiltrators
Officials have blamed the unrest on unnamed infiltrators and on Sudan’s international isolation, saying they are taking steps to address the economic turmoil. Bankers say US sanctions, though reduced, have choked the economy.
Bashir, subject of an arrest warrant from the International Criminal Court (ICC) for alleged war crimes in Darfur and hoping for a financial lifeline from the International Monetary Fund, has tried to be measured in his response to burnish his international image, diplomats say. He has tempered warnings to protesters with expressions of sympathy for their plight.
But protests in Khartoum and other cities have continued almost daily, with demonstrators calling for an end to what they see as Bashir’s kleptocratic and incompetent rule. Popular chants include “Down, that’s it!” and “Peaceful, peaceful against the thieves.”
In a country where more than half the population of 42 million are under the age of 19, many of the protesters are young men and women struggling to find jobs that could pay them a living wage. Unemployment rose from 12 percent in 2011 to around 20 percent in recent years, with youth unemployment at more than 27 percent, according to IMF and World Bank estimates.
Businessmen say an unskilled factory worker in Khartoum earns from 1,000 to 1,500 pounds ($18 to $27) a month and a skilled worker may make double that, barely enough for a family to survive.
Some families in the capital have pulled their children out of school over the last year or are serving them fewer and less nutritious meals, making them more susceptible to disease, according to a government presentation to social workers last month in Khartoum.
The economic crisis has hit salaried staff, young people and the unemployed particularly hard. Families have had to sell scarce belongings and crime has risen, the presentation said.
Since the protests began the government has been spending even more money on largely imported, subsidised products including bread and fuel. But it has all but run out of the foreign currency it needs to pay for them, causing widespread shortages.
Debts
Sudan already has foreign debts of more than $50 billion, and has been struggling to attract new external financing. By the end of 2018, inflation was running at more than 70 percent. It then dipped to 43 percent, according to official figures, though one US-based economist put it at nearly double that.
Authorities will likely continue to expand the money supply, exacerbating inflation, bankers and economists say.
It was a short-lived attempt to increase the price of bread to ease a shortage that sparked the current unrest. Raising the price of diesel for industry but not other consumers will cause yet more problems, warned Abbas Ali Elsayed, Secretary General of the Sudanese Chambers of Industry.
“This will lead to lots of corruption. People will start selling to factories on the black market. It will affect the competitiveness of factories,” he said.
Higher diesel prices will spread rapidly through the economy as the cost of running farm machinery, transport and industry surges, analysts say. They also risk crushing Sudan’s struggling manufacturers.
Factory owner Gasim had been investing to add chocolate bars and potato chips to the foodstuffs already produced in one of his plants. Diesel shortages, power failures and falling demand from consumers who can’t afford his products mean he has slashed output and shed workers instead.
Late last month, his suppliers told him the government had increased the diesel price for industry to 222 Sudanese pounds per imperial gallon from 28 pounds.
“We will have to close the factory completely if the price doesn’t go back down,” he said.
The 240 people he employs at the factory and a nearby cardboard packaging plant, and more than 100 seasonal staff, could be out of work.
Some older Sudanese remember different times before Bashir came to power in a coup in 1989.
Sudan’s major cities had 65 cinemas, many privately run, before Islamist governments under Bashir with a “hostile” attitude to the arts shut them all down, says film director Suleiman Ahmed Ibrahim.
“This is a part of modern life that young people in Sudan have lost, and could be one of the reasons they complain about the political system,” he said.
At universities, quality has fallen and many academics have gone overseas, while an emphasis on Islamic education has led to “the neglect of mathematics, science and arts,” said Ali Mohamed Othman, a 69-year-old professor at the Sudan University of Science and Technology.
University staff, like other members of the middle class, used to be able to get by on part of their salary. Now it only lasts a few days every month.