Lebanese Cabinet’s endorsement of reforms clears way for IMF approach

Special Lebanese Cabinet’s endorsement of reforms clears way for IMF approach
A flame engulfs a car during recent clashes between protesters and Lebanese soldiers in the northern port city of Tripoli. (AFP)
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Updated 01 May 2020

Lebanese Cabinet’s endorsement of reforms clears way for IMF approach

Lebanese Cabinet’s endorsement of reforms clears way for IMF approach
  • Prime Minister Hassan Diab says door remains open for possible future adjustments to plan

BEIRUT: The UN’s special coordinator for Lebanon, Jan Kubis, has welcomed the Lebanese government’s endorsement of a long-awaited plan for economic reforms in the financially stricken country.

“The Cabinet took an important step toward addressing the economic crisis, and it is now up to the political powers and civil society to express their opinions, paving the way for negotiations with the International Monetary Fund and other international partners,” he said.

Lebanon is facing a financial crisis that has worsened during the coronavirus pandemic. The exchange rate for the dollar has reached as high as 4,200 lira on the black market, which effectively reduces the value of salaries by more than half. This prompted the return of widespread protests on the streets, during which one civilian has been killed and dozens of soldiers and security officers injured when the demonstrations turned violent in several cities.

“None of the ministers has refused asking the IMF for help,” Prime Minister Hassan Diab said after Thursday’s Cabinet session, during which the reform plan was endorsed.

“We will adopt this plan and seek help from the IMF and foreign authorities. The plan aims to launch negotiations … to restructure the sovereign debt, which will require between six and nine months.”

Diab confirmed that the door remains open for “the possibility of subsequent adjustments to the plan.”

“Lebanon is crushed by more than $90 billion of debt and the amount that the IMF will provide depends on the negotiations,” he added.

“The plan does not require the approval of the parliament but it will still be submitted to be reviewed by parliamentary committees and other authorities to ensure its proper implementation.”

Since the Cabinet won a vote of confidence in the parliament on Feb. 10, the plan has undergone weeks of drafting, discussion and political debate. It appears the government has finally received Hezbollah’s approval to negotiate with the IMF, with some agreed controls in place that were developed and applied as amendments to the plan.

Finance Minister Ghazi Wazi said the reforms program contains “a lot of positives.”

Ministers did not specifically address the erosion of the exchange rate during their meeting on Thursday.

Information Minister Manal Abdel-Samad said: “The Cabinet did not deal with the exchange rate of the local currency and left the matter to future developments.”

The dollar in Lebanon has several exchange rates: The official rate remains fixed at 1,515 lira, money changers are selling and buying it for about 3,200 lira, and banks are giving depositors their money in dollars at a fixed rate of 3,000 lira.

Before announcing the details of the finalized plan, Diab visited the home of former prime minister Saad Hariri, where they and former prime ministers Najib Mikati, Fouad Siniora and Tammam Salam, issued a statement supporting state reforms and stressing the need to adhere to the constitution and to the Taif Agreement, which formed the basis for ending Lebanon’s civil war.

With the only new coronavirus cases confirmed in Lebanon affecting four people who were repatriated two days ago, the street protests continued on Thursday. Demonstrators largely respected the precautionary measures introduced to limit the spread of the virus.

Some organized car convoys in a number of cities, during which they waved Lebanese flags. Others entered the VAT Directorate building in Beirut shouting: “The Lebanese people have had enough of the traders’ monopoly and theft.”

On Wednesday night in Saida and Tripoli, some banks were set on fire during riots. 

The army command said 23 soldiers were injured as they were tried to control the rioters, including one whose fingers were cut off. 

Twenty-four people, including Syrians and Palestinians, were arrested for throwing stones and Molotov cocktails at the army, rioting and attacking private and public properties.