Govt warns of ‘painful steps’ to avert to­tal col­lapse

Draft pol­icy state­ment also calls for in­ter­est rate cuts as part of res­cue plan

The Daily Star (Lebanon) - - FRONT PAGE - By Hus­sein Dakroub

BEIRUT: The new gov­ern­ment’s pol­icy state­ment calls for “painful steps” and in­ter­est rate cuts as part of a “com­pre­hen­sive res­cue plan” to avert a to­tal col­lapse of the coun­try’s ail­ing econ­omy, ac­cord­ing to a draft ob­tained by The Daily Star Sun­day.

The 17-page draft state­ment was agreed Satur­day by a min­is­te­rial com­mit­tee tasked with pre­par­ing the gov­ern­ment’s pol­icy state­ment that has been meet­ing since Prime Min­is­ter Has­san Diab formed a 20-mem­ber Cab­i­net on Jan. 21.

The 12-mem­ber min­is­te­rial com­mit­tee is set to meet un­der Diab at the Grand Serail Mon­day for a fi­nal read­ing of the draft pol­icy state­ment dis­trib­uted to min­is­ters Satur­day.

“The gov­ern­ment’s pol­icy state­ment will be ready Mon­day,” Fi­nance Min­is­ter Ghazi Wazni said in a state­ment. Wazni could not be reached to elab­o­rate on the “painful steps” planned by the gov­ern­ment to ad­dress the dire eco­nomic and fi­nan­cial cri­sis, the worst in decades.

The gov­ern­ment warned in the pol­icy state­ment that it must rapidly take “painful steps” to avoid a “to­tal col­lapse” of the econ­omy.

“Le­banon is fac­ing a crip­pling and fate­ful eco­nomic, fi­nan­cial, so­cial, liv­ing and en­vi­ron­men­tal cri­sis, an in­creas­ing un­em­ploy­ment, a se­vere poverty and a col­lapse of the in­fra­struc­ture and ba­sic ser­vices that di­rectly threaten peo­ple’s salaries, health, hous­ing and liveli­hood,” the draft state­ment said.

Not­ing that Le­banon was in the grips of “a fate­ful cri­sis” as a re­sult of ac­cu­mu­lated prob­lems and chal­lenges, the draft said: “This re­quires from us as of­fi­cials a deep re­view and also tak­ing painful steps as part of a com­pre­hen­sive and in­te­grated res­cue plan.” The draft did not say what these “painful steps” are.

Seek­ing to ap­pease hun­dreds of thou­sands of Le­banese who have taken to the streets since Oct. 17, call­ing for a change of the decades­old sec­tar­ian gov­ern­ing sys­tem and the ouster of the en­tire po­lit­i­cal rul­ing elite they ac­cuse of cor­rup­tion and mis­man­age­ment, the draft said: “Since the Le­banese, men and women, have clearly and bravely ex­pressed [their views] since Oct. 17, 2019, and de­manded their rights, we agreed on pledges and com­mit­ment con­tained in our pol­icy state­ment. The re­quire­ments and re­forms to which we com­mit es­sen­tially stem from the de­mands of the Le­banese.”

This is in ad­di­tion to key re­forms promised by Le­banon and are awaited by donor coun­tries at the CEDRE con­fer­ence held in Paris in April 2018, it said. The re­forms are es­sen­tial to un­lock over $11 bil­lion in grants and soft loans pledged by donor coun­tries at the con­fer­ence to fi­nance the im­ple­men­ta­tion of vi­tal in­fra­struc­ture projects in Le­banon.

The Cab­i­net said its pol­icy state­ment was founded on “a work­ing pro­gram that in­cludes an emer­gency res­cue plan and a pack­age of re­forms that con­tains a ju­di­cial and leg­isla­tive re­form work­shop, fight­ing graft and rec­ti­fy­ing and tack­ling the pub­lic fi­nances, to be ac­com­pa­nied by eco­nomic mea­sures to en­cour­age mov­ing from a wel­fare econ­omy to a pro­duc­tive econ­omy.”

“It is not pos­si­ble for any res­cue plan to suc­ceed if we do not re­duce in­ter­est rates on loans and de­posits in or­der to re­vi­tal­ize the econ­omy and lower the cost of debt,” the draft state­ment said.

It added that the gov­ern­ment was com­mit­ted to im­ple­ment­ing the res­cue plan quickly “be­cause ev­ery day that passes with­out im­ple­men­ta­tion will cost the coun­try and its peo­ple more losses and dam­age.”

“We might reach a to­tal col­lapse and it will be dif­fi­cult, if not im­pos­si­ble, to avoid it,” the draft state­ment said. “We feel it is our duty to talk frankly to the Le­banese peo­ple that the fate­ful steps and tools of rem­edy we are propos­ing will be painful.”

The gov­ern­ment’s pol­icy state­ment promised to re­gain the peo­ple’s con­fi­dence. “Restor­ing con­fi­dence is a long path that re­quires telling the peo­ple the truth and needs con­crete achieve­ments,” the draft said.

It called on in­ter­na­tional donors to pro­vide soft loans to help meet the trea­sury’s fi­nanc­ing needs, though it did not name any in­sti­tu­tions or say how much was re­quired.

The draft state­ment called for speed­ing up a sec­ond li­cens­ing round for oil and gas ex­plo­ration, ap­point­ing a new elec­tric­ity sec­tor reg­u­la­tor, and rais­ing tax rev­enues with bet­ter collection and a pro­gres­sive in­come tax.

One of the world’s heav­ily in­debted coun­tries, Le­banon must de­cide quickly how to deal with a $1.2 bil­lion Eurobond ma­tur­ing in March.

Ear­lier Sun­day, an of­fi­cial source told The Daily Star that the min­is­te­rial com­mit­tee would hold a fi­nal ses­sion Mon­day, clear­ing the way for a Cab­i­net meet­ing to be held at Baabda Palace ei­ther Wed­nes­day or Thurs­day to ap­prove the draft pol­icy state­ment.

Once en­dorsed by the Cab­i­net, copies of the pol­icy state­ment will be sent to MPs and Speaker Nabih Berri who will then con­vene Par­lia­ment to de­bate the pol­icy state­ment be­fore a vote of con­fi­dence on the gov­ern­ment is held, the source said.

The source ruled out a Par­lia­ment con­fi­dence vote ses­sion this week. He said if the draft pol­icy state­ment was en­dorsed by the Cab­i­net Wed­nes­day or Thurs­day, law­mak­ers would be given 48 hours to study the draft be­fore go­ing to Par­lia­ment to de­bate it.

On the po­lit­i­cal front, the draft pol­icy state­ment re­it­er­ated pre­vi­ous gov­ern­ments’ com­mit­ment to the pol­icy of dis­so­ci­a­tion from re­gional con­flicts.

Al­though the gov­ern­ment is dom­i­nated by Hezbol­lah and its al­lies and is coined as “one sided,” af­ter the Fu­ture Move­ment, the Le­banese Forces, the Pro­gres­sive So­cial­ist Party and the Kataeb Party have stayed out of it, the draft state­ment avoided calls by Syria’s al­lies to nor­mal­ize ties with the Da­m­as­cus regime, a sen­si­tive and con­tentious is­sue.

On the thorny is­sue of Hezbol­lah’s weapons and re­sis­tance against Is­raeli oc­cu­pa­tion of Le­banese lands, the gov­ern­ment adopted al­most the same for­mu­las adopted by pre­vi­ous gov­ern­ments

“With re­gard to the strug­gle against the Is­raeli enemy, we will spare no ef­fort or re­sis­tance to­ward the lib­er­a­tion of Le­banese lands that re­main un­der [Is­raeli] oc­cu­pa­tion and the pro­tec­tion of our na­tion against an enemy who is still cov­et­ing our land, our waters and our nat­u­ral wealth,” the draft said.

“Based on the state’s re­spon­si­bil­ity and role in main­tain­ing Le­banon’s sovereignt­y, in­de­pen­dence, unity and safety of its peo­ple, the gov­ern­ment af­firms the state’s duty and en­deav­ors to lib­er­ate the Che­baa Farms, the Kfar Shouba hills and the Le­banese part of the vil­lage of Gha­jar by all le­git­i­mate means, while stress­ing the right of Le­banese cit­i­zens, both women and men, to re­sist the Is­raeli oc­cu­pa­tion, repulse its ag­gres­sions and re­cover the oc­cu­pied lands,” it added.

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