- "The cabinet unanimously approved the economic plan after making minor amendments to the proposed formula."
- The President of the Republic said, "today is a historic day for Lebanon because for the first time it endorses an economic and financial plan."
- The features of the economic meltdown began to appear in Lebanon since the summer of the year 2019.
Today, the Lebanese government approved an economic reform plan aimed at lifting the country from a crisis that is considered the greatest threat to its stability since the civil war, between 1975 and1990. The Lebanese presidency office posted a brief tweet to that effect.
“The cabinet unanimously approved the economic plan after making minor amendments to the proposed formula,” it said on Twitter, without any additional details. The approval of the plan came after three consecutive days of protests in Lebanon. Hundreds of demonstrators took to the streets to protest against the high cost of living, the loss of their livelihoods, and the absence of a horizon for a solution to the economic crisis.
Demonstrators chanted “revolution!” and raised their voices loudly against “hunger.” Confrontations took place between them and army units, especially in the city of Tripoli in the north. Since its formation at the beginning of this year, the government, headed by Hassan Diab, has been devising an economic rescue plan that includes necessary reforms and restructuring of the accumulated public debt.
According to an initial copy of the plan that was leaked weeks ago, and sparked widespread criticism, the government appreciates Lebanon’s need today for more than $80 billion to get out of the crisis and boost the economy. That includes between $10-15 billion in foreign support over the next five years.
The government, which has been required to undertake “rapid and effective” reforms, hopes to persuade the international community to provide any financial assistance, most notably $11 billion approved by the Cedar Conference in the year 2018. This small country is exhausted by years of successive political crises and decades of corruption.
At the beginning of the government session, Diab considered that “with the approval of the economic plan, we will have put the train on the railroad, and we have saturated it with a lesson because it will determine the path of the state to reform the reality.” He considered that its importance is “practical and includes an economic vision for the future of Lebanon.” The President of the Republic said, “today is a historic day for Lebanon because for the first time it endorses an economic and financial plan.”
The current economic crisis is the worst since the Civil War (1975-1990), which is the result of years of slow growth, with the state unable to undertake structural reforms. Lebanon is one of the most indebted countries in the world, and its debt is valued at $92 billion. That is equivalent to more than 170 percent of its GDP.
In March, the government announced that it would stop paying the foreign debt as part of a comprehensive debt restructuring, aimed at protecting the country’s foreign currency reserves, which have declined dramatically over the past months.
The Protests Continue
The features of the economic meltdown began to appear in Lebanon since the summer of the year 2019, with the emergence of a parallel market for the exchange rate of the Lebanese pound, and the scarcity of the dollar. This led hundreds of thousands of Lebanese people to take to the streets for several months. Lebanese raised their voices against the political class, whom they accuse of corruption and hold responsible fore their livelihood.
The demonstrations toppled the previous government headed by Saad Hariri. The movements have calmed down, relatively, with the formation of the Diab government at the beginning of this year. Since then, the new coronavirus has intervened, causing 721 infections and 24 deaths so far. At the same time, the general closure measures have exacerbated the suffering of the citizens.
Lebanese have also seen a decline in their purchasing power, due the worsening economic paralysis. The Lebanese pound recorded a new, record drop in the black market earlier this week, crossing the threshold of 4,000 to the Dollar. This coincides with a 55% rise in consumer prices.