Finance ministry fears plunge into ‘abyss’ as Lebanon’s reserves shrink

Finance ministry fears plunge into ‘abyss’ as Lebanon’s reserves shrink
An ambulant flower vendor rests along the side of a road by vehicles waiting at a traffic light in Lebanon's capital Beirut on November 18, 2020. (AFP)
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Updated 19 November 2020

Finance ministry fears plunge into ‘abyss’ as Lebanon’s reserves shrink

Finance ministry fears plunge into ‘abyss’ as Lebanon’s reserves shrink
  • Thursday saw a sudden increase in the dollar exchange rate
  • The exchange rate reached 8,200 Lebanese pounds on the black market before dropping slightly

BEIRUT: “Lebanon is currently experiencing a gradual deterioration toward the abyss in light of its political stalemate, financial and economic hardship, and the lack of a support program from the International Monetary Fund (IMF), as the required reforms have not yet been achieved,” a source from the Lebanese Ministry of Finance told Arab News on Thursday.
The source, who asked to remain anonymous, expects this stalemate to be accompanied by the lifting of subsidies on basic commodities and expects the situation to worsen over the next few months.
Thursday saw a sudden increase in the dollar exchange rate, which reached 8,200 Lebanese pounds on the black market before dropping slightly. The rate had dropped to under 7,000 Lebanese pounds less than a month ago when Saad Hariri was assigned to form a new government based on the French rescue initiative on Oct. 22.
However, that has yet to happen, with the Free Patriotic Movement and Hezbollah’s allies objecting to not being involved in naming ministers.
Al-Manar TV, which is affiliated with Hezbollah, accused the French of taking sides and explicitly warned France against thinking that it is in control, saying “Things will slip out of its hands at any moment.”
The Progressive Socialist Party (PSP), headed by Druze leader Walid Jumblatt, expressed its concern on Thursday about the fate of the central financial reserve in light of the continued provision of subsidies, which it says are being smuggled into Syria instead of going to Lebanese families.
Hadi Aboulhosn, a PSP MP, said in a press conference: “The subsidies must be replaced with direct subsidies for poor families. Lebanon has reached the edge of the acceptable ceiling for using reserves, that is $17.5 billion. Some leaked data shows that this ceiling is being violated. Lebanon uses more than $530 million per month to subsidize fuel, flour, medicine, and other commodities.”
“If the crisis facing the Lebanese people worsens, it will lead to a major social explosion within the next two months, with the Banque du Liban ceasing to support basic commodities as an inevitable consequence of the country reaching a dead end at the political, economic, financial, and social levels, in addition to the gradual decline of the state’s capacity, the continued financial bleeding, and the shrinking of the central reserve,” he continued. “All of this will exacerbate smuggling, monopoly, the lack of price controls, and the failure of the needy and poor groups to benefit from the support mechanisms.”
Aboulhosn claimed that rationalizing subsidies could save around $5 billion, partly be preventing “the exploitation practiced by big traders and importers” and “curbing smuggling.”
According to PSP board member Mohamed Basbous, “The Banque du Liban loses at least $140 million annually to cover the difference between the official exchange rate and the parallel market’s exchange rate due to the smuggling of gasoline alone.”
Basbous pointed out that the diesel quantities imported by Lebanon increased from about 1,100,000 tons in 2011 to 2,500,000 tons in 2019 — an increase of 130 percent in six years.
He claimed that around 50 percent of imported diesel is smuggled into Syria every year. “The quantity that is smuggled annually amounts to 73,500,000 cans. Therefore, the Banque du Liban loses approximately $418 million annually in subsidized hard currency due to smuggling alone.”


Kuwait parliamentary race kicks off under shadow of pandemic

Updated 05 December 2020

Kuwait parliamentary race kicks off under shadow of pandemic

Kuwait parliamentary race kicks off under shadow of pandemic
  • More than 567,000 voters will be eligible to choose among the 326 candidates contesting the vote
  • Kuwait has a lively political life with a parliament elected for four-year terms

KUWAIT CITY: Kuwait is holding parliamentary elections Saturday under the shadow of Covid-19, with facilities laid on for citizens infected with the disease to vote in special polling stations.
The oil-rich country has enforced some of the strictest regulations in the Gulf to combat the spread of the coronavirus, imposing a months-long nationwide lockdown earlier this year.
But while some curbs have eased, over-the-top election events that traditionally draw thousands for lavish banquets are out, masks remain mandatory and temperature checks are routine when venturing outdoors.
Infected people or those under mandatory quarantine are usually confined to home, with electronic wristbands monitoring their movements.
But in an effort to include all constituents, authorities have designated five schools — one in each electoral district — where they can vote, among the 102 polling stations across the country.
Election officials are expected to be in full personal protective equipment.
Kuwait has a lively political life with a parliament elected for four-year terms that enjoys wide legislative powers.
Political disputes are often fought out in the open.
Parties are neither banned nor recognized, but many groups — including Islamists — operate freely as de facto parties.
But with more than 143,917 coronavirus cases to date, including 886 deaths, the election campaign has been toned down this year.

A worker cleans desks at a polling station ahead of parliamentary elections in Abdullah Salem, Kuwait, on December 3, 2020. (REUTERS/Stephanie McGehee)

The polls, which open at 8:00 a.m. (0500 GMT), will be the first since the new emir, Sheikh Nawaf Al-Ahmad Al-Sabah, took office in September following the death of his half-brother, 91-year-old Sheikh Sabah Al-Ahmad Al-Sabah.
But with the opposition weakened in recent years, no major political shifts are expected.
A few electoral banners dotted through the streets have been the only reminder of the nation’s political calendar.
Instead, this year’s campaign has mainly been fought on social networks and in the media.
More than 567,000 Kuwaiti voters will be eligible to choose among the 326 candidates contesting the vote, including 29 women.
Ahmad Deyain, secretary general of the opposition group Kuwaiti Progressive Movement, said he expected a lower voter turnout than previous years after the dulled-down campaign.
The usual themes are a constant though, from promises to fight corruption and plans to address youth employment, to freedom of expression, housing, education and the thorny issue of the “bidoon,” Kuwait’s stateless minority.
From 2009 to 2013, and especially after the Arab Spring revolts of 2011, the country went through a period of political turmoil, with parliament and cabinets dissolved several times after disputes between lawmakers and the ruling family-led government.
“Kuwait is still undergoing a political crisis since 2011, and that page has not yet turned,” Deyain told AFP.
“There are still disputes over the electoral system and mismanagement of state funds.
Deyain said he expected some parliamentarians in the new National Assembly to be “more dynamic” in trying to resolve some issues.
Kuwait was the first Gulf Arab state to adopt a parliamentary system in 1962, and women in 2005 won the right to vote and to stand for election.