Lebanese protest despite govt’s economic rescue plan

Central Bank governor defends his role amid crisis

BEIRUT, May 2, (AP): Hundreds of Lebanese rallied Friday outside the central bank in Beirut and elsewhere in the country, a day after the prime minister said he will seek a rescue program from the International Monetary Fund to deal with a spiraling economic and financial crisis.

The protesters criticized the government’s handling of the unprecedented crisis that saw the local currency crash, devastate their savings and send prices and inflation soaring. Scuffles broke out outside a private bank and troops were seen beating and pulling away at least one protester.

The government “is not even providing the most basic needs,” said a protester in Beirut, Ahmad Demashqia. There were also rallies in northern and southern Lebanon to commemorate May Day, the international Labor Day.

Lebanese Prime Minister Hassan Diab on Friday signed the official request for assistance from IMF. He said the government has taken “the first step on the path to saving Lebanon from the deep financial pit.” On Thursday, the Cabinet had adopted a longawaited rescue plan.

But the protesters seemed skeptical. In the southern city of Sidon, 19-yearold Omar al-Mughrabi said the country needs radical change - not reform of failing or ineffective policies.

“Going to the IMF is not the solution,” al-Mughrabi said. “We don’t need any more debt than we already have.”

Lebanon, one of the most indebted nations in the world, defaulted for the first time in March on its sovereign debt. Anti-government protests that erupted in October subsided during a nationwide lockdown since mid-March to blunt the spread of the coronavirus. Lebanon, a country of 5 million people, has reported only 729 cases and 24 deaths, and began to ease some virus restrictions this week.

Many of the protesters wore face masks against the virus.

The lockdown worsened the recession’s sharp bite, increasing unemployment and popular resentment. In recent days, protesters ignored social distancing measures and calls to stay home to rally outside the central bank and private banks, setting off clashes with the security forces and the army. In the northern city of Tripoli, a protester was killed earlier this week.

Prices of basic goods have increased, in some cases by over 60%. The Lebanese pound, pegged to the dollar for 30 years, lost nearly 60% of its value.

With a stable national currency, the Lebanese had used their pound and the dollar interchangeably, many keeping their savings in dollars. To deal with a liquidity crunch and a massive imports bill, the central bank decreed that most withdrawals could only be in the local currency. The decision further weakened the pound.

Lebanon’s Central Bank governor defended himself against scathing criticism, claiming there is a “systematic campaign” meant to hold him responsible for the country’s recent financial crisis and the collapse of the national currency.

Speaking in an hour-long video conference, Gov. Riad Salameh, who has held the post since 1993, said he did what he had to do to maintain Lebanon’s monetary stability in the face of various crises over the past years. He blamed politicians for reneging on repeated promises of reform.

Salameh was responding to accusations made by Diab last week in which he held the governor responsible for the downward spiral and accused him of pursuing “opaque” policies that sent the pound crashing against the dollar.

Diab urged Salameh to speak openly to the public about the financial crisis, hinting that the governor has intentionally engineered the crash of the pound.

Salameh rejected the accusations, saying Wednesday there was nothing opaque and that he had handed over requested information to the prime minister on April 20. He said that while it was true that the Central Bank has financed the government, it is the government that spent the funds.

The Central Bank currently has 20 billion dollars in reserves, Salameh said and reassured the Lebanese that their bank deposits were safe and that the state would not intervene to take a cut of their money to cover its debts.

The Lebanese pound has been on a downward trajectory for weeks amid a worsening liquidity crunch and an economic slump. But it appeared to be in a free fall over the last few days, selling as low as 4,000 pounds to the dollar, down from a fixed peg of 1,500 pounds to the dollar in place for 30 years.

The tiny Mediterranean country of about 5 million people is one the most indebted in the world. Nationwide protests broke out in October against the government because of widespread corruption and mismanagement of resources.

Diab’s government came to office in January and was quickly engulfed in a nationwide health crisis over the novel cornavirus, a crisis that deepened the country’s economic recession. The Lebanese authorities have reported more than 700 cases and at least 24 deaths from the pandemic.