In Lebanon, mired in its worst crises, painful steps for the government

With the completion of the ministerial declaration at speed record and to appear before the Lebanese parliament next Monday, the government of Prime Minister Najib Mikati is in waiting for many economic and political challenges, perhaps the most important of which is to stem the economic collapse in lack of regional and international trust in the ruling political class.

The new government must first of all have the task of supplying the economy with doses of oxygen through rapid measures to revive the bogged down country in a crisis described by the World Bank as the worst since 1850.

Especially after the lira lost 90% of its value and the annual inflation rate reached 150%, which negatively reflected on the living conditions of the Lebanese, as unemployment exceeded 45% of the population, leaving 77% in poverty and 40% in Extreme poverty.

As a result, the Lebanese suffer from a severe shortage of daily essentials such as medicine, fuel and electricity, which has paralyzed the activity of hospitals, companies and industries.

Exceptional Powers

Faced with this reality in degradation, the economic expert, Nasser Al-Saidi, former Minister of Economy and Trade and former first deputy governor of the Banque du Liban, believed that “the government should take 4 fundamental and” strict “steps on the method of “electric shock” treatment.

However, the success of this treatment is linked to the conferral of exceptional powers on the new government that authorize it to issue swift legislative decrees and in step with the necessary and necessary reform steps, and the current parliament will disagree, especially before of the elections scheduled for the spring of next year.

In Lebanon, mired in its worst crises, painful steps for the government

A protester holds in hand drawing showing Hezbollah leader Aoun and Berri crouched on the Lebanese flag (AFP archive)

4 basic steps

In an interview with Al, he enumerated the four basic steps that the government should take:

1- Reform the state finances by adopting various measures, including the immediate adjustment of taxes and customs duties, which are still collected according to the official dollar rate (1515), while the price is elusive on the black market.

Completely and officially eliminate the subsidy on most subsidized goods, especially as about 80% of this subsidy did not benefit the poor groups of society, but was wasted and evaporated in the sewers of smuggling and in the pockets of merchants.

From Lebanon (archive - Reuters)

From Lebanon (archive – Reuters)

2- Reform monetary policy and correct the exchange rate by unifying the exchange rate of the lira against the dollar, and the Central Bank of Lebanon has definitively stopped lending to the state to put an end to inflation rates.

3- Restructuring of the banking sector.
4- Social prevention, not the social or annonative card as it is promoted, rethinking the Law on Social Security and Health.

terms of the IMF

Furthermore, Al-Saidi considered that “these four phases of reform are at the heart of the conditions of the International Monetary Fund within a corrective program, and there is an international, regional and European willingness to help Lebanon, provided that it implements a broad set of profound economic, monetary and financial governance “.

Lebanese Banks (AFP)

Lebanese Banks (AFP)

75 billion dollars to be recovered

He stressed that “Lebanon needs a financial package of about 75 billion dollars in the short and medium term (5 to 7 years) distributed among the private sector, in in particular the banking sector, to restructure it and the Banque du Liban, in addition to supporting the balance of payments and infrastructures “.

Restoration of relations with Arab countries

According to the economy, the daughter of politics, the economic-financial road map to exit the crisis will remain ink on paper unless the government works to restore foreign confidence lost due to the practices of the dominant political forces, from which it is formed. the current government, even if they claim it is “independent”.

In turn, Joseph Bahout, professor of international relations at the American University of Beirut, held that “the return of international confidence in Lebanon is conditional on the implementation of the necessary reforms and the commitment of the government to hold parliamentary elections in the expected date in spring 2022, as indicated in the draft ministerial declaration “.

Demonstration in front of the Lebanese parliament (archive - AFP)

Demonstration in front of the Lebanese parliament (archive – AFP)

In a statement to, indicated that “restoring Lebanon’s relations with its Arab brothers is a necessity today, and here comes Mikati’s role in investing in its Arab relations to reconnect what has been interrupted.”

He also felt that the timing of that government’s formation reflects a “solution” in the region, and part of that solution is the recent contact that has taken place between French President Emmanuel Macron and Iranian President Ibrahim Raisi.

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