High hopes as Hariri seeks UAE cash for ailing economy, Emiratis can now travel to Lebanon

Lebanese Prime Minister Saad Hariri attends the UAE-Lebanon Investment Forum in Abu Dhabi, UAE. (Reuters)
Updated 10 October 2019

High hopes as Hariri seeks UAE cash for ailing economy, Emiratis can now travel to Lebanon

  • Abu Dhabi hosting conference where Lebanon seeking partnerships and investments
  • Hariri’s advisers said the mood was “positive” as Emirati citizens now allowed to travel to Lebanon

ABU DHABI: Lebanon hopes the UAE will inject cash into its central bank to help shore up the ailing economy, Prime Minister Saad Al-Hariri said on Monday on a visit to the emirates in which leaders sought a deal behind closed doors.

Abu Dhabi is hosting a conference at which heavily indebted Lebanon is seeking partnerships and investments in food, infrastructure, oil and gas, and renewable energy.

The UAE economy minister said financing for Lebanon would be discussed, while one of Hariri’s advisers said the mood was “positive” — though no formal announcements had been made by late Monday.

However, the UAE announced its citizens would be allowed to travel to Lebanon starting from Tuesday (October 8), according to an Emirates News Agency statement released on Monday.

Faced with one of the world’s highest debt burdens, low growth and crumbling infrastructure, Hariri’s government has vowed to implement long-delayed reforms. It is also seeking to curb a sharp loss of confidence among foreign investors and among depositors who are turning away from the Lebanese pound.

Asked on the conference sidelines whether Lebanon will see a cash injection for its central bank, Prime Minister Saad Al-Hariri told Reuters: “We are working on everything,” adding: “Yes we are hoping, we will work on it.”

Financial markets have tightened significantly this year, raising the costs for Lebanon of borrowing and insuring against default. But hopes for a deal boosted dollar-denominated bonds on Monday, which remain down some 15% this year.

The central bank has been drawing down its foreign exchange reserves to repay the state’s maturing dollar-denominated debt, and said last week it was prepared to do more.

Central bank governor Riad Salameh, also attending the conference, said the bank was continuing to provide dollars to local financial markets, adding that Lebanon has “numerous possibilities” as it looks for assistance but it expects support from the UAE.

Lebanon’s traditionally high reserves of foreign currency have been in decline because capital inflows into its banking system from Lebanese abroad have been slowing.

An adviser to Hariri, Ghattas Khoury, told Reuters the mood at the conference was positive and that there would be a meeting between the Lebanese premier and UAE authorities later on Monday.

Beirut, which has debt-to-GDP ratio, hopes its Gulf allies or regional sovereign wealth funds will offer support but no public pledges have so far been made.

UAE economy minister Sultan bin Saeed Al Mansouri told reporters his government believes Lebanon’s investment climate is becoming more “settled.”

He made no financing commitments, but said any financing would “be discussed with the government and they’ll make the right decision.”

Lebanon is preparing to sell a Eurobond of around $2 billion this month, with cash raised earmarked for refinancing maturing debts and shoring up shaky public finances.

On Oct. 1, Moody’s put Lebanon’s Caa1 credit rating under review for downgrade, saying anticipated external financial assistance had not yet been forthcoming.

Ratings agency Fitch downgraded Lebanon to CCC in August, citing debt servicing concerns.

At the same time, S&P Global affirmed Lebanon at B-/B with a negative outlook, saying it considered foreign exchange reserves sufficient to service government debt in the “near term.”


UN food chief: Beirut could run out of bread in 2 1/2 weeks

Updated 31 min 45 sec ago

UN food chief: Beirut could run out of bread in 2 1/2 weeks

  • Beasley said a ship with 17,500 metric tons of wheat flour should arrive in Beirut “within two weeks"

UNITED NATIONS: The head of the UN food agency said Monday he’s “very, very concerned” Lebanon could run out of bread in about 2 ½ weeks because 85% of the country’s grain comes through Beirut’s devastated port — but he believes an area of the port can be made operational this month.
David Beasley, who is in Beirut assessing damage and recovery prospects, told a virtual UN briefing on the humanitarian situation following last week’s explosion in the Lebanese capital that “at the devastated site, we found a footprint that we can operate on a temporary basis.”
“Working with the Lebanese army, we believe that we can clear part of that site,” Beasley said. “We’ll be airlifting in a lot of equipment, doing everything we can.”
Beasley said he had met with Cabinet ministers — who all resigned later Monday — and told them the UN needs “absolute cooperation now, no obstacles” because people on the streets are angry and said they need international help but “please make certain that the aid comes directly to the people.”
For the first time since last week’s blast, two ships docked at Beirut’s port on Monday including one carrying grain, according to state media.
The head of the workers union at the port, Bechara Asmar told Al-Jadeed TV that since the grain silos were destroyed by the explosion, the material will be pumped directly to trucks or bags after being sanitized.”
“This is a glimmer of hope,” Asmar said about the first arrivals adding that the port’s 5th basin where the ships docked remains intact despite the blast.
Beasley, the executive director of the World Food Program, said a ship with 17,500 metric tons of wheat flour should arrive in Beirut “within two weeks, and that’s to put bread on the table of all the people of Lebanon and that will give us a bread supply for 20 days.”
“While we’re doing that, we’ve got a 30-day supply of about 30,000 metric tons of wheat that we’re bringing in, and then another 100,000 metric tons over the next 60 days after that,” Beasley said.
Najat Rochdi, the UN humanitarian coordinator for Lebanon, told a press conference after briefing UN members that Beasley went to the port with engineers to assess what can be done.
“They are very optimistic to start actually this rehabilitation as soon as this week to increase the capacity of the port of Beirut,” she said.
Rochdi said she understands a ship will be arriving Thursday with some construction material, followed by a ship with wheat and grain, “to address the issue of food security and to hopefully make sure Beirut is not going to be short of bread.”
UN humanitarian chief Mark Lowcock told diplomats the “swift and wide-ranging” humanitarian response is just the first of a three-phased response to the tragedy.
“The second — recovery and reconstruction — will cost billions of dollars and require a mix of public and private finance,” he said. ”The third element is responding to the Lebanon’s pre-existing socioeconomic crisis which is already exacerbated by COVID-19.”
Lowcock, the undersecretary-general for humanitarian affairs and emergency relief coordinator, stressed the Beirut explosion last Tuesday “will have repercussions far beyond those we see in front of us now.”
He urged donors, international financial institutions and the wider international community to “come together and put their shoulder to the wheel,” stressing that the Lebanese people will be served best by a collective response.
UN Secretary-General Antonio Guterres told UN member nations the voices of Lebanon’s angry people “must be heard.”
“It is important that a credible and transparent investigation determine the cause of the explosion and bring about the accountability demanded by the Lebanese people,” he said. “It is also important that reforms be implemented so as to address the needs of the Lebanese people for the longer term.”
Guterres also pledged that “the United Nations will stand with Lebanon to help alleviate the immediate suffering and support its recovery.”