Lebanon plan based on flexible exchange rate in ‘coming period’- Finance Minister

Lebanon's Finance Minister Ghazi Wazni talks during a meeting with Lebanese political leaders to present the plan aimed at steering the country out of a financial crisis, at the presidential palace in Baabda, Lebanon May 6, 2020. (Reuters)
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Updated 06 May 2020

Lebanon plan based on flexible exchange rate in ‘coming period’- Finance Minister

  • "We are forced in the current phase to continue in the policy of fixing (the rate)," the minister said
  • The Lebanese pound has lost more than half of its value since October

BEIRUT: A government plan for getting Lebanon out of a financial crisis is based on a shift to a flexible exchange rate, but in the “coming period,” and a currency peg will be maintained for now, Finance Minister Ghazi Wazni said on Wednesday.
The government approved the plan, which entails vast losses in the financial system, last week, announcing it would form the basis of aid negotiations with the International Monetary Fund.
The crisis is seen as the greatest risk to Lebanon’s stability since its 1975-90 civil war.
Prime Minister Hassan Diab said the plan was not sacred and could evolve, urging Lebanese to set aside differences during a meeting with some of the country’s fractious politicians.
The Lebanese pound has lost more than half of its value since October and depositors have largely been shut out of their savings as dollars have become ever more scarce. Inflation, unemployment and poverty have soared.
The pound has been pegged at 1,507.5 to the dollar since 1997 and the central bank supplies dollars at this price for the purchase of fuel, medicine and wheat. Dollars were changing hands at over 4,000 pounds on the parallel market on Wednesday.
The plan is based on “a policy of a flexible exchange rate in the coming period, in a gradual and studied way,” Finance Minister Ghazi Wazni told the meeting.
He gave no time frame for the change but said freeing up the exchange rate before restoring confidence and securing international support would lead to a big deterioration in the value of the pound and uncontrolled price rises of basic goods.

DEBT DEFAULT
"We are forced in the current phase to continue in the policy of fixing (the rate)," he said.
The Diab government took office in January with backing from the powerful, Iran-backed Shiite group Hezbollah and allies including President Michel Aoun, the Christian Maronite head of state.
Speaking after the meeting, Samir Geagea, a Maronite rival to Aoun and Hezbollah opponent, said he would not support this or any other plan that did not start with serious steps to fight corruption and waste, including customs evasion.
These are widely seen as prime causes of the crisis, landing Lebanon with one of the world’s biggest public debt burdens. Lebanon defaulted on its sovereign debt in March.
Neither leading Sunni politician Saad Al-Hariri, a former prime minister and traditional ally of Gulf Arab and Western states, nor Druze leader Walid attended the meeting.
“Time is very precious. The accumulated losses are very big. The situation is very painful, and the chance to rectify (it) will not last long,” Diab said.
Wazni said Lebanon had started negotiations to restructure its sovereign debt two weeks ago. Benefits of going to the IMF included securing financial support of $9-$10 billion, he said.
Critics of the plan include Lebanon’s commercial banks. The plan foresees them sustaining losses of some $83.2 billion.
The banking association is working on its own plan that aims to preserve some of its capital rather than writing it off as set out in the government proposals.


LIVE: Middle East returns to normal life amid strict COVID-19 measures 

Updated 44 min 5 sec ago

LIVE: Middle East returns to normal life amid strict COVID-19 measures 

DUBAI: Efforts to return life gradually back to some kind of normality in parts of the Middle East continue, as governments get ready to reopen borders and airlines take bookings for flights. 
Tunisia said it will open its sea, land and air borders on June 27 in the hope of rescuing its tourism industry as the coronavirus pandemic comes under control.
Emirates airline also announced that it was taking bookings for flights from Dubai to 12 Arab countries from the start of July. Emirates began operating scheduled flight services to nine destinations around the world from May 21, including London Heathrow, Frankfurt, Paris, Milan, Madrid, Chicago, Toronto, Sydney and Melbourne.
Meanwhile, Lebanon’s commercial complexes, hotels, cafes and museums reopened their doors to customers on Monday after closing for two-and-a-half months. 

June 2, Tuesday (GMT Times)

10:24 - Kuwait has confirmed 887 coronavirus cases and the recovery of 50 percent of total infected people.

10:22 - UAE has recorded 596 coronavirus cases and 388 recoveries.

09:43 - New reported cases of coronavirus are steadily declining in Western Europe, but not in Russia and Eastern Europe: World Health Organization spokeswoman said.

09:34 - Formula One has unveiled an eight-race schedule in Europe from July 5 amid the coronavirus pandemic.

09:32 - Iran has reported 64 coronavirus deaths, 3,117 cases, raising total infected people to 157,562 with 7,942 fatalities.

09:20 - The number of coronavirus deaths in Britain is close to 50,000, Reuters reported.

09:07 – Hong Kong will extend restrictions on foreign visitors by another three months and an eight-person limit on group gatherings by two weeks, Health Secretary Sophia Chan said on Tuesday.
Both measures were due to expire later in June.
Travellers to Hong Kong need to undergo a mandatory 14 day quarantine period.

08:45 – 12,739 people died from coronavirus in England and Wales as of May 22, the Office for National Statistics said.

08:16 – Senegal has postponed the restart of schools until further notice after several teachers tested positive for the new coronavirus, the education ministry said late on Monday.

07:51 – Russia has confirmed 8,863 coronavirus cases and 182 deaths in the past 24 hours.

07:02 – A Wuhan doctor who worked with coronavirus whistleblower Li Wenliang died of the virus last week, state media reported Tuesday, becoming China's first COVID-19 fatality in weeks.
07:00 Paris gets some of its pre-lockdown life back as cafes and restaurants partially reopen Tuesday.
06:51 – The global coronavirus death toll has topped 375,000, according to AFP tally.

06:45 – The first Rohingya refugee died from coronavirus in Bangladesh, an official said.

05:59Egypt has sanitized prisons and carried out tests on prisoners across the country after banning visits to help curb the spread of coronavirus, local daily Egypt Today reported.

05:50 – A cluster of nine coronavirus cases raised concerns in Hong Kong over renewed local transmission in a city that has been one of the most successful in keeping the pandemic under control. 

05:18 – The United States on Monday recorded 743 new coronavirus deaths in 24 hours, according to the Johns Hopkins University tracker, bringing its total to 105,099 since the global pandemic began.