Lebanon News

Economic crisis turning into financial crisis: Khalil

Lebanon's Finance Minister Ali Hasan Khalil talks during a news conference at the Finance Ministry, Beirut, April 29, 2014. (Reuters/Sharif Karim)

BEIRUT: Caretaker Finance Minister Ali Hasan Khalil said Sunday that Lebanon’s economic crisis “is turning into a financial crisis,” and warned of further deterioration if the government isn’t formed soon.

“The crisis today is changing from an economic crisis into a financial crisis, and we hope that it does not turn into a monetary crisis that will cause the Lebanese people to lose faith in their state. ... Any further delay in government formation will reflect negatively on the country’s stability,” the state-run National News Agency quoted Khalil as saying.

In a statement from Dec. 18, Khalil warned that Lebanon faces “many risks” if the next government fails to carry out “serious financial reforms aimed at boosting revenues, reducing expenditures and reforming institutions that are straining the state revenues.”

Earlier this month, Moody’s Investors Service changed Lebanon’s outlook from stable to negative on the government’s issuer ratings, but maintained its long-term rating at B3, which indicates high credit risk.

“The negative outlook reflects an increase in risks to the government’s liquidity position and the country’s financial stability, in large part as a consequence of domestic and geopolitical risks that have become more intractable,” Moody’s report said.

In his statement Sunday, Khalil, who is affiliated with the Amal Movement, also said that Lebanon should consider inviting Syria to the Arab Economic and Social Development Summit, which will be held in Beirut from Jan. 19-20.

“Any summit without Syria is meaningless,” Khalil said. “It is important for Lebanon to correct its official position with Syria.”

A decision not to invite Syria would be in compliance with Beirut’s declared policy of dissociation from regional conflicts - particularly from Syria’s 7-year-old war.

Prime Minister-designate Saad Hariri’s Future Movement and other parties, namely the Lebanese Forces and the Progressive Socialist Party, vehemently oppose any contact with the regime before a political settlement is reached to end the war there.

However, Hezbollah and its allies, including the Amal Movement, have been pushing for Lebanon to normalize ties with the Syrian regime.

 

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