News ID: 260548
Published: 0314 GMT October 21, 2019

Facing protests, Lebanon approves emergency economic reforms

Facing protests, Lebanon approves emergency economic reforms
AFP

Lebanon approved an emergency package of economic reforms on Monday, in response to a wave of anti-government protests that Prime Minister Saad al-Hariri praised for breaking down sectarian barriers and restoring a sense of national unity.

Across the country, people blocked roads for a fifth day. Schools, banks and businesses closed. Hundreds of thousands of people have flooded the streets, furious at a political class they accuse of pushing the economy to the point of collapse.

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 under a power-sharing system that made it impossible to halt waste.

Protests continued after the measures unveiled by Hariri in a televised speech from the presidential palace.

The reforms included the symbolic step of halving the salaries of government ministers and lawmakers, as well as moves toward implementing long-delayed changes seen as vital to putting Lebanon’s public finances on a sustainable path.

Hariri said the government would approve within three weeks the first phase of a capital investment program that donors have pledged to finance with $11 billion conditional on Lebanon implementing reforms.

“We have today taken steps to fight corruption, fight waste, we have made big projects,” Hariri said, adding that the moves were not designed to get people out of the street and the government must work to win back the confidence of the people.

"These decisions are not designed as a trade-off. They are not to ask you to stop expressing your anger. That is your decision to make," Hariri, himself a prime minister's son, said.

The crowd erupted into shouts of "revolution, revolution" when Hariri finished his address.

The government approved a 2020 budget with no new taxes and a deficit of around 0.6% compared to the targeted level of around 7% for 2019, Hariri said.

Cost-cutting steps included abolishing the ministry of information and other public institutions immediately and merging other unnecessary ones to save money.

The government also approved the establishment before the end of the year of a committee to fight corruption.

Lebanon’s large banking sector would contribute 5.1 trillion Lebanese pounds ($3.4 billion) to deficit reduction, including through an increase in the tax on bank profits, Hariri said.

The government would also accelerate the long-delayed reform of the state-run power sector, which drains $2 billion from the treasury every year while failing to deliver enough power for Lebanese who depend on private generators to fill the gap.

Lebanon's political leaders have warned that the government's resignation at this time would only deepen the crisis gripping the small Mediterranean country.

Hariri also said he supported the idea of early elections, a key demand among the hundreds of thousands of protesters who have taken to Lebanon's streets since Thursday.

President Michel Aoun, who had been conspicuously silent since the start of the demonstrations, suggested at the beginning of the cabinet meeting that banking secrecy should be lifted for high-ranking officials.

Lebanon has strict rules over bank account privacy that critics say makes the country susceptible to money laundering.

Given the size of the gatherings, the five-day-old mobilization has been remarkably incident free, with armies of volunteers forming to clean up the streets, provide water to protesters and organize first aid tents.

Lebanon's debt-burdened economy has been sliding towards collapse in recent months, adding to the economic woes of a population exasperated by rampant corruption, the lack of job opportunities and poor services.

Among the protesters' main grievances is the poor supply of electricity from the state.

Schools, banks, universities and many private businesses closed their doors Monday, both for security reasons and in an apparent bid to encourage people to join the demonstrations.

Reuters and AFP contributed to this story.

 

   
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