Lebanon approved an emergency reform package yesterday in response to protests over dire economic conditions, but the moves did not go far enough to persuade demonstrators to leave the streets or investors to halt a plunge in its bonds.
Hundreds of thousands of people have flooded the streets since Thursday, furious at a political class they accuse of pushing the economy to the point of collapse.
Roads were blocked for a fifth day across the country.
Schools, banks and businesses were closed, and Banks are expected to remain shut today.
Prime Minister Saad al-Hariri, in a televised speech, said the new measures might not meet the protesters’ demands but were a start towards achieving some of them.
The government must work to recover trust, he said.
“You are the compass and...your movement frankly is what led us to this decision today,” added Hariri, who said big steps had been taken towards fighting corruption and waste.
But despite the reforms, Lebanon’s dollar-denominated bounds suffered hefty losses yesterday following sharp drops on Friday.
Some sank to record lows. Investors said the turmoil showed Lebanon was running out of time to fix its economic problems.
“It is just a mess — and it looks like it is more and more unsustainable. I don’t think it is a final nail in the coffin — but it is looking ominous,” said Kevin Daly, Senior Investment Manager, Emerging Market Debt at Aberdeen Standard Investments. “There has been fiscal adjustment, but it has not been enough.”
The reforms included the symbolic halving of the salaries of ministers and lawmakers, as well as moves towards implementing long-delayed measures vital to putting the public finances on a sustainable path.
Maya Mhana, a teacher listening to the speech in Beirut with other protesters, was not convinced.”We are remaining in the streets, we don’t believe a single word he said,” she said.
Protesters sang into the night in Beirut and continued to demonstrate in other parts of the country.
“We don’t believe that they can change in two days,” said Fadi Abou Dargham, a 55-year-old jeweller.
The protests have been extraordinary because of their size and geographic reach in a country where political movements are normally divided on sectarian lines and struggle to draw nationwide appeal.
Lebanon has one of the world’s highest levels of government debt as a share of economic output.
The government includes most major parties, run by politicians widely perceived to have mobilised state resources and influence for their own gain.
The economy has been hit by political paralysis and regional conflicts, compounded by strains in the financial system that have risen as inward capital flows have slowed.
Unemployment among the under 35s runs at 37%. Lebanese have started to feel pressures in the financial system more acutely of late, with dollars becoming harder to obtain dollars at the official exchange rate.
The pound, pegged at its current rate for two decades, has been under pressure.
International donors last year pledged $11bn to help Lebanon finance capital investment, conditional on reforms.
Hariri said the new decisions would satisfy donors and the government would approve within three weeks the first phase of the capital investment programme.
The government approved a 2020 budget with no new taxes and a deficit of around 0.6% of national output, Hariri said, describing this as a historic achievement.
The deficit for 2019 is around 7% of GDP.
LEAVE A COMMENT Your email address will not be published. Required fields are marked*
Hundreds attend funeral of Palestinian
Kuwait reports 851 new coronavirus cases, 7 deaths
Iran suggests up to 225 killed in November protests
Police shoot dead disabled Palestinian
Kuwaiti Ministry of Health announces 1,008 new infections of Covid-19
As lockdown eases, Iran's mosques to resume daily prayers
Kuwait reveals 1,072 infections
Former Tehran mayor elected Iranian speaker
Rouhani seeks co-operation from MPs as parliament opens