Lebanon News

Lebanon govt wins confidence vote, says IMF talks have begun

BEIRUT: Lebanon’s new government Monday won the support of a big majority from Parliament during a session that debated its policy statement and granted confidence vote to a Cabinet of 24 specialists, giving ministers a shot in the arm to begin tackling a series of pressing problems facing the crises-hit country.

Out of the 100 lawmakers who voted following a morning and evening parliamentary session, 85 MPs voted for the government and 15 against, Speaker Nabih Berri, who chaired the session, announced Monday night. The remaining 17 lawmakers were not present during the vote.

Speaking minutes ahead of the confidence vote, Prime Minister Najib Mikati disclosed that the government has begun negotiations with the International Monetary Fund on a bailout package to rescue the debt-ridden nation from its worst economic meltdown in history.

“We will immediately begin the reform file. We have actually begun discussions with the International Monetary Fund. The talks with it [IMF] are not a picnic and the fund is not a charity. This issue is not an option but a mandatory passageway that must succeed in order to serve as the first foundation toward salvation and the right way for Lebanon’s revival,” Mikati said in speech Monday night, responding to a number of MPs who criticized the government’s formation.

A total of 20 MPs spoke during the two-part session devoted to debating the government’s policy statement and voting on the new Cabinet unveiled by Mikati on Sept. 10, after 13 months of political stalemate that exacerbated the economic depression, described by the World Bank as one of the world’s worst since the 1850s, posing the gravest threat to the country’s stability since the 1975-90 Civil War.

The government was widely expected to win a big majority of votes out of the current 117 members in the legislature after declarations by a number of independent MPs and the Lebanese Forces’ 13-member parliamentary Strong Republic bloc that they will not vote for the government. Eight MPs resigned from Parliament last year in the wake of the devastating Beirut Port explosion, while three others passed away. The 11 have not been replaced.

Responding to the government’s critics, Mikati said: “I don’t want to enter into polemics with any MP.”

He reiterated his commitment to implement reform measures contained in the government’s policy statement and called for cooperation from Parliament to overcome the crippling economic and financial crisis. “We are in a difficult health situation .. We are in a difficult living and social situation,” he said.

Referring to the ailing electricity sector, which is draining the cash-strapped Lebanese treasury with nearly $2 billion in annual subsidies, Mikati underlined the need for raising the electricity tariffs and increasing supply and production.

The prime minister hoped that Parliament would quickly act to approve a capital control law. “We will follow up on the forensic audit in all institutions and ministries without exceptions,” he said.

Reading out the government’s policy statement in the morning session, Mikati pledged to immediately resume negotiations with the IMF on a rescue package.

He also promised that the government would thrash out a plan to restructure the battered banking sector and revitalize the country’s crumbling economy saddled with more than $90 billion in public debt. Mikati restated the government’s commitment to implementing reform measures contained in the French initiative designed to lift Lebanon out of its economic depression.

The session, held at UNESCO Palace, was delayed for about an hour due to an electricity outage in the building -- typical in a country suffering from severe fuel shortages.

The policy statement, in addition to outlining the country’s internal and external policies, also sets the government’s priorities and plans to deal with an unprecedented financial downturn that has propelled more than 70 percent of Lebanon’s 6 million population into poverty amid a crashing Lebanese pound that has lost around 90 percent of its value since late 2019.

“To ward off the financial and economic collapse, our government pledges, soon after winning confidence, to resume immediately negotiations with the International Monetary Fund with a view to reaching an agreement on an aid plan from the fund based on a short and medium-term rescue program emanating from the recovery plan after modernizing it, while beginning to implement reforms in all fields,” Mikati said in his speech.

Mikati said the government would cooperate with Parliament to approve the capital control law and resume negotiations with creditors over a restructuring of public debt on which Lebanon defaulted last year.

Mikati said the government was committed to implementing all provisions of the French initiative and its recommendations for reforms, recovery and rebuilding of the Beirut Port that was devastated along with large swaths on the capital by a massive explosion in August last year that killed 214 people and wounded thousands of others.

In his speech, Mikati, whose government has a mandate of only eight months to embark on reforms and address the country’s multiple crises, promised to hold parliamentary elections, set for May 2022, on time, after which a new government will be formed.

ARAB RELATIONS

Mikati said the government would seek to boost Lebanon’s international relations and activate its engagement with the international community and its European partners to serve Lebanon’s supreme interests.

The prime minister appealed to “brotherly Arab countries” to help Lebanon out of its current crisis, promising to strengthen Beirut’s relations with them, strained in past years mainly over Hezbollah’s growing influence in the country.

“We insist on preserving Lebanon’s relations with brotherly Arab countries and are keen on activating historic cooperation among our Arab countries. We call on Arab brothers to stand by Lebanon’s side as they have always done in this crisis from which it is reeling,” he said.

Saudi Arabia, which wields great influence in Lebanon, has not yet commented on Mikati’s government more than 10 days after its formation.

In April, Saudi Arabia banned imports of fruits and vegetables from Lebanon, linking the measure to an increase in drug smuggling. The Saudi measure came at a time when Beirut’s ties with Saudi Arabia and other Arab Gulf states have been strained due to what these states perceive as “Hezbollah’s growing influence” in Lebanon. The strain has prompted Gulf states to dither on supporting Lebanon financially. Gulf states have long channeled funds into Lebanon's ailing economy but they are alarmed by the rising influence of Hezbollah, a powerful group backed by their arch-rival Iran.

Mikati said the government would work to close illegal border crossings with Syria to curb smuggling operations that are draining the Lebanese treasury of billions of dollars annually.

In promising to fight corruption rampant in the public administration, largely blamed for the economic deterioration, Mikati said the government would continue taking “measures necessary to sign the contract relating to the forensic audit of the Central Bank’s accounts and to begin necessary measures for the financial audit in ministries, autonomous utilities, councils, funds and public institutions.”

Finance Minister Youssef Khalil Friday signed a new contract with restructuring consultancy Alvarez and Marsal (A&M) to carry out a forensic audit of the Central Bank’s accounts, another key demand of donors.

Speaking on behalf of the Future Movement’s parliamentary bloc headed by former Prime Minister Saad Hariri, who is abroad, Sidon MP Bahia Hariri said the bloc would grant confidence to the government. She focused in her speech on the “extraordinary circumstances” through which the country is passing, including the rising poverty rate as a result of the economic crisis.

“We are all partners in confronting challenges and restoring all causes of legitimacy ... With all determination and firmness, we will grant our confidence to Prime Minister Najib Mikati and ministers for the sake of Lebanon’s salvation,” Bahia Hariri said.

MP Gebran Bassil, head of the Free Patriotic Movement’s 21-member Strong Lebanon bloc, the largest in Parliament and the biggest in Christian representation, said granting confidence to the government was tied to implementing essential reforms.

“Today, we will grant confidence that is linked to implementing essential reforms. We will be at the top of those supporting [the government]. But we will fiercely oppose it if [reforms] are not carried out,” Bassil said during the Parliament session. “Confidence is linked to five essential matters: depositors’ money; social safety; financial reform; [investigations] into the port explosion; and parliamentary elections,” Bassil added.

A number of the LF’s Strong Republic bloc MPs and independent lawmakers spoke at the session, saying they will not vote for the government.

 

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