Lebanon approves long-awaited economic rescue plan after months of unrest
Issued on: Modified:
The Lebanese government on Thursday approved a long-awaited plan to rescue the economy from its worst crisis in decades following a fresh wave of angry street protests this week. Nationwide protests broke out in October accusing the country's political class of corruption and mismanagement.
Announcing the plan on Thursday, Diab said his government would use it to apply for an International Monetary Fund (IMF) programme to help the economy through an acute crisis that could last up to five years.
"If we get (IMF support), and God willing we will, it will help us to pass through this difficult economic phase, which could be three, four or five years," Diab said.
The rescue plan would help “build the Lebanon of tomorrow”, said Diab in a televised speech to the nation.
The economic strains amplified by the pandemic has led the Lebanese Central Bank to call on the country’s banks and financial institutions to grant extraordinary Lebanese pound or US dollar loans to clients to cover previous loan installments.
The government’s rescue plan aims to protect depositors' money but will seek a contribution from those who benefited from extremely high interest rates and financial engineering and those who stole public funds.
President Michel Aoun called it a "historic day" for Lebanon. "It is the first time the government approves an economic-financial plan after the country was almost driven to ruin because of the lack of planning," he said in comments carried by the official National News Agency.
The plan was finalised following several days of violent confrontations between protesters and Lebanese security forces that saw dozens of angry youth vandalising local banks in the northern city of Tripoli and the southern port city of Sidon. The violence left one protester dead and several injured on both sides in some of the most serious anti-government rioting triggered by the economic crisis amid a weeks-long coronavirus lockdown.
Panic and anger has gripped the public as they watched the national currency – the Lebanese pound, which has been pegged to the dollar for almost three decades – plummet, losing more than 60 percent of its value in recent weeks. Public debt has soared while the economy contracted and foreign inflows dried up in the already heavily indebted country that relies on imports for most of its basic goods. The tiny Mediterranean country of about five million people is one the most indebted in the world, with the national debt forming nearly 170 percent of GDP.
Nationwide protests broke out in October against the country's political class amid accusations of widespread corruption and mismanagement of resources.
The World Bank warned in November that the poverty rate could rise to 50 percent if the economic situation worsened.
International donors have long demanded that Lebanon institute major economic changes and anti-corruption measures to unlock $11 billion in pledges made in 2018. But the country's economic crisis deepened and the cash-strapped government announced in March it was defaulting on its sovereign debt for the first time.
Lebanese politicians have traded blame over who is responsible for the crisis, the worst since Lebanon's 15-year civil war ended in 1990.
Lockdown adds to economic woes
A lockdown to fight the coronavirus pandemic has added to the economic woes besetting the country, which include soaring inflation, a liquidity crunch and a plummeting currency.
Demonstrators in northern Lebanon have attacked banks and clashed with security forces for three consecutive nights, re-energising a protest movement launched in October against a political class the activists deem inept and corrupt.
The government unanimously approved the economic plan after minor amendments, the presidency said on Twitter following a cabinet meeting in the presidential palace in Baabda.
Lebanon's economic crisis is rooted in decades of state waste, corruption and bad governance that landed the country with one of the world's biggest public debt burdens. Lebanon defaulted on its sovereign debt last month for the first time.
(FRANCE 24 with AP, AFP and REUTERS)
Daily newsletterReceive essential international news every morningSubscribe