Lebanese govt vows reform with help of $11bn international aid package
The virus crisis poses an unprecedented challenge for the Lebanese people, says PM
The Lebanese government has called for international financial support to help it implement plans to tackle the country’s crippling economic crisis.
President Michel Aoun and Prime Minister Hassan Diab told a meeting of representatives of member states of the International Support Group (ISG) for Lebanon that their priority was to resolve the nation’s financial meltdown which had been compounded by the coronavirus disease (COVID-19) pandemic. Asking for ISG help in line with its $11 billion CEDRE conference aid pledges — made on condition of internal reforms in Lebanon — was seen by major Lebanese parties, especially Hezbollah and the Amal Movement, as the preferred option to seeking assistance from the
International Monetary Fund (IMF). The impact of restrictions on movement imposed to stop the spread of COVID-19 has only served to deepen the economic turmoil in Lebanon, paralyzing business activity and adding to the hardships of its people. According to the World Bank, poverty rates in the country have increased to 40 percent. During the meeting with the ISG delegates – which was attended by UN special coordinator for Lebanon, Jan Kubis – President Aoun said: “Lebanon was preparing to launch a workplan to address its economic, financial and social crises when the coronavirus pandemic struck the world.
“The country was forced to declare a health emergency, which froze its recovery and exacerbated its crises, adding to them a health crisis, and now we face all these crises and repercussions and we welcome any international assistance.
“Lebanon suffers from a significant economic contraction, a decline in domestic demand and import, a severe shortage of foreign currencies, high unemployment and poverty rates, high prices and a low exchange rate of the Lebanese pound in the black market, in addition to the deficit in public finance due to a decline in tax revenues.
“The state decided to suspend payments for Eurobonds to contain the budget deficit and stop the depletion of its foreign currency reserves that have reached very low levels.”
He added: “The state is about to complete preparing a comprehensive economic-financial plan, with the aim of correcting the deep imbalances in the economy.
“Given the gravity of the financial situation and the significant economic effects on the Lebanese people, the residents, and the refugees, the reform program will need foreign financial support, and we rely heavily on $11 billion which CEDRE pledged to offer to Lebanon.”
Diab urged the ISG to launch “the economic, financial, monetary, and social reform plan based on good governance, and we are putting the final touches on it.”
The premier said his government pledged to carry out a complete reform program to restructure the banking sector and the budget of the Central Bank.
“We decided to conduct an audit of the Central Bank accounts for full transparency, and to strengthen our negotiating position in this difficult period in the history of Lebanon.” Kubis said: “The COVID-19 crisis poses an unprecedented challenge for the Lebanese people due to the country’s economic problems, rampant corruption, and social pressures which cause despair.”
BACKGROUND
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The impact of restrictions on movement imposed to stop the spread of COVID-19 has only served to deepen the economic turmoil in Lebanon, paralyzing business activity and adding to the hardships of its people. According to the World Bank, poverty rates in the country have increased to 40 percent.
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Lebanese prime minister says his government has pledged to carry out a complete reform program to restructure the banking sector and the budget of the Central Bank.