Lebanon News

Lebanon’s Cabinet vows to enact reforms, resume IMF talks

Lebanon's Minister of Information George Kordahi speaks during a press conference at the presidential palace in Baabda, east of the capital Beirut, on September 13, 2021. (Photo by ANWAR AMRO / AFP)

BEIRUT: Lebanon’s new Cabinet Thursday approved a draft policy statement that pledges to launch reforms, a key demand of donors, and resume negotiations with the International Monetary Fund on a bailout package to rescue the crises-hit, debt-ridden nation from its worst economic meltdown in history.

The policy statement, drafted by a ministerial committee in a record time of three days, said the government will also resume negotiations with creditors over a restructuring of public debt on which Lebanon defaulted last year.

The Cabinet’s move, coming a week after its formation, clears the way for a Parliament session to seek a vote of confidence based on the policy statement that outlines the government’s internal and external policies, as well as its priorities and plans to deal with the worst economic and financial crisis since the 1975-90 Civil War, including severe food, fuel and medicine shortages that paralyzed normal life in the country.

Media reports said Speaker Nabih Berri planned to set a parliamentary session early next week -- Monday or Tuesday -- for MPs to begin debating the government’s policy statement before a vote of confidence is held.

The 24-member government, unveiled by Prime Minister Najib Mikati last Friday after 13 months of political stalemate that exacerbated the economic depression, appeared to be assured of gaining the votes of more than half of the 128-member legislature amid signs that the Free Patriotic Movement’s 21-member Strong Lebanon bloc, the largest in Parliament and the biggest in Christian representation, would also vote for the government despite its decision to stay out. Eight MPs resigned from Parliament last year in the wake of the devastating Beirut Port explosion while two others passed away. The 10 were not replaced.

President Michel Aoun, who chaired the Cabinet session at Baabda Palace, the second since its formation a week ago, thanked members of the ministerial committee tasked with drafting the policy statement for their “strenuous work and cooperation” to finalize the draft statement in a short time.

“The speed [in finishing the draft statement] reflects seriousness and perseverance to carry out the required tasks,” Aoun said at the beginning of the session. Aoun hoped that all ministers would adopt this pattern in work, productivity and cooperation, saying this pattern is “one of the main reasons for success, especially since the conditions in Lebanon are very pressing and time is precious.”

The speed with which the 12-member committee headed by Mikati finished drafting the policy statement less than a week after the Cabinet formation without differences among ministers over sensitive issues, such as Hezbollah’s arms, clearly reflected the government’s resolve to quickly move forward to tackle a series of crises facing the Lebanese, including an unprecedented financial downturn that has propelled more than 70 percent of Lebanon’s 6 million population into poverty amid a crashing currency that has lost more than 90 percent of its value since late 2019.

Speaking at the Cabinet meeting, Mikati highlighted the “atmosphere of cooperation that prevailed among members of the ministerial committee that was charged with drafting the policy statement.”

Thanking the committee’s members for their cooperation, Mikati underlined the “permanent need for solidarity to achieve the government’s required productivity.”

Since the Cabinet formation on Sept. 10, both Aoun and Mikati have underscored Lebanon’s need to resume talks with the IMF on a bailout package to help it out of its economic and financial depression.

STALLED TALKS

Lebanon began talks with the IMF on a $10 billion bailout package in May 2020, but the negotiations have been stalled by a dispute between different interest groups representing Lebanese banks and the government over the size of losses at the Central Bank.

Among the conditions set by the IMF is the lifting of subsidies on all essential items, Parliament’s approval of a capital control law, a unified currency exchange rate, restructuring of the public debt, restructuring of the banking sector, a forensic audit of the Central Bank’s accounts, curbing cross-border smuggling with Syria, overhauling the ailing electricity sector and streamlining the bloated public sector.

The new government faces a host of tough challenges that begin with halting the country’s economic collapse, embarking on essential reforms, resolving the severe food, fuel and medicine shortages and chronic power cuts and end with supervising next year’s parliamentary elections. This is in addition to restoring confidence between the people and the state and also with the international community, which has linked its financial aid to implementing structural reforms.

Plans to deal with the severe economic and financial crisis, described by the World Bank as one of the world’s worst since the 1850s, posing the gravest threat to its stability since the Civil War, are highlighted in the policy statement.

In addition to the “national constants” contained in policy statements of previous governments, such as commitment to UN resolutions, the 1989 Taif Accord, and Lebanon’s right to recover parcels of lands still occupied by Israel in the south and its right to resist Israeli occupation of Lebanese lands, the new government’s policy statement underlined the urgency of resuming negotiations with the IMF on a rescue program and commitment to carrying out reforms and curbing cross-border smuggling with Syria.

The policy statement said the government was committed to all the reform provisions outlined in the French initiative and would renew and develop a financial recovery plan that was drawn up by the previous government.

The government will also work with Parliament to pass a capital control law, the statement said. The government will hold parliamentary elections, scheduled in May 2022, on time, it added.

According to the policy statement, the government promises to carry out a long-awaited forensic audit of the accounts of the Central Bank and all ministries that would help determine the causes that led to the country’s bankruptcy and economic collapse.

The forensic audit should reveal the scale of losses at BDL and expose evidence of any corruption in its transactions – a prospect that no doubt has many of the country’s ruling elite shifting uncomfortably in their seats.

The policy statement reaffirmed cooperation between the government and Parliament in the ongoing investigations into the massive explosion in August last year that devastated Beirut Port, killed 214 people, wounded thousands and damaged entire neighborhoods in the capital.

As in previous policy statements, the document underlined the right of displaced Syrians to their country and the return of Palestinian refugees to their homeland

In welcoming the new government, the United States, France and the European Union have urged it to undertake reforms quickly, with Washington calling on Mikati to address the "dire needs and legitimate aspirations of the Lebanese people". The EU Sunday urged Lebanon's new government to move quickly to adopt reforms that would pave the way for a deal with the IMF to halt the country's economic collapse.

On the eve of the Cabinet session, Mikati met at his Beirut Downtown residence Wednesday night with a delegation from the FPM’s parliamentary Strong Lebanon bloc headed by MP Gebran Bassil. The meeting was apparently aimed at securing the bloc’s support after the bloc linked granting the government a confidence vote to the policy statement.

The bloc demanded that the government’s policy statement pledge to carry out a series of reform measures, including a forensic audit of the Central Bank’s accounts, drawing up a financial recovery plan, and fighting corruption.

A statement issued by Bassil’s media office after the meeting said agreement was reached on “constructive cooperation between the bloc and the government in Parliament to facilitate the ratification of the reform laws and helping the government by supporting it to implement the rescue program and measures or opposing it if it does not abide by this.”

There was “a positive and constructive dialogue” on the government’s reform program and the need to hold parliamentary elections on time and the right of Lebanese in diaspora to vote, the statement said. It added that the bloc would meet later after the Cabinet’s ratification of the policy statement to take a final stance on whether or not to grant a confidence vote to the government.

MP Salim Aoun from the Strong Lebanon bloc said Thursday that the government would gain a confidence vote from Parliament with or without the vote of the bloc’s MPs.

“There is a positive tendency at this stage. The government of Prime Minister Najib Mikati will win confidence with or without the votes of the Strong Lebanon bloc,” Aoun told a local radio station.

 

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