Lebanon’s Aoun hopes government will be formed next week, former minister warns of need for huge bailout

Lebanese President Michel Aoun said in a statement on Friday that he hoped a new government would be formed next week. (Reuters/File Photo)
Updated 03 January 2020

Lebanon’s Aoun hopes government will be formed next week, former minister warns of need for huge bailout

  • Aoun said work was underway to form a government of specialists

BEIRUT: Lebanon needs a $20 billion to $25 billion bailout including International Monetary Fund support to emerge from its financial crisis, former economy minister Nasser Saidi told Reuters on Friday.

President Michel Aoun said on Friday that he hoped a new government would be formed next week. But analysts say the cabinet to be led by Hassan Diab may struggle to win international support because he was nominated by the Iranian-backed Hezbollah group and its allies.

Lebanon's crisis has shattered confidence in its banking system and raised investors' concerns that a default could loom for one of the world's most indebted countries, with a $1.2 billion Eurobond due in March.

Lebanon's politicians have failed to come up with a rescue plan since Prime Minister Saad al-Hariri quit in October after protests over state corruption.

Depositors and investors say they have been kept in the dark about the country's dire financial situation.

Saidi said time was running short, and that $11 billion in previously pledged support from foreign donors was now roughly half of what was needed to mount a recovery.

"The danger of the current situation is we're approaching economic collapse that can potentially reduce GDP (for 2020) by 10%," Saidi said in an interview.

Economists have said 2020 is likely to register Lebanon's first economic contraction in 20 years, with some saying GDP will contract by 2%.

Others have predicted a long depression unseen since independence from France in 1943 or during the 1975-90 civil war.

Lebanese companies have laid off workers and business has ground to a halt. A hard currency crunch has prompted banks to restrict access to dollars and the Lebanese pound trades a third weaker on the parallel market, driving up prices.

"Our policymakers are not wiling to recognise the depth of the problems we have ... They need the courage to tell the Lebanese population that difficult times are coming," said Saidi.

Credit ratings agencies have downgraded Lebanon's sovereign rating and the ratings of its commercial banks on fears of default.

Saidi said a $20-$25 billion package could guarantee payment on some of the country's public debt, enabling it to restructure in a way that would extend maturities and reduce interest rates.

Saidi said that would need support from the IMF, World Bank, and Western and Gulf states.

Hariri last month discussed the possibility of technical assistance from the IMF and World Bank, but there has been no public mention of a financial package.


So-called honor killing of teen girl brings outcry in Iran

Updated 45 min 4 sec ago

So-called honor killing of teen girl brings outcry in Iran

  • Iranian president Rouhani has urged his cabinet to speed up the introduction of harsher laws against such killings

TEHRAN: The so-called honor killing of a 14-year-old Iranian girl by her father, who reportedly used a farming sickle to behead her as she slept, has prompted a nationwide outcry.
Reza Ashrafi, now in custody, was apparently enraged when he killed his daughter Romina on Thursday after she ran away with 34-year-old Bahamn Khavari in Talesh, some 320 kilometers (198 miles) northwest of the capital, Tehran.
In traditional societies in the Middle East, including Iran, blame would typically fall on a runaway girl for purportedly having sullied her family’s honor, rather than on an adult male luring away a child.
Romina was found five days after leaving home and taken to a police station, from where her father brought her back home. The girl reportedly told the police she feared a violent reaction from her father.
On Wednesday, a number of national newspapers featured the story prominently and the social media hashtag #RominaAshrafi reportedly has been used thousands times on social media, with most users condemning the killing.
Proposed legislation against honor killings has apparently shuttled for years among various decision-making bodies in Iran.
On Wednesday, Romina Ashrafi’s case led Iranian President Hassan Rouhani to urge his Cabinet to speed up harsher laws against such killings and he pushed for speedy adoption of relevant legislation.
There is little data on honor killings in Iran, where local media occasionally report on such cases. Under the law, girls can marry after the age of 13, though the average age of marriage for Iranian women is 23. It is not known how many women and young girls are killed by family members or close relatives because of their actions, perceived as violating conservative Islamic norms on love and marriage.
Iran’s judiciary said Romina’s case will be tried in a special court. Under the current law, her father faces a prison sentence of up to 10 years.
Iran’s vice president in charge of family affairs, Masoumeh Ebtekar, expressed hope that a bill with harsher punishments will soon be in the final stages of approval.
Shahnaz Sajjadi, special assistant to citizens’ rights in the presidential directorate on women and family affairs, on Wednesday told the khabaronline.ir news website “We should revise the idea that home is a safe place for children and women. Crimes that happen against women in the society are less than those that happen in the homes.”