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21 October 2019

Lebanese Prime Minister agrees to reforms amid nationwide protests

Prime Minister Saad Hariri, who is leading a coalition government mired by sectarian and political rivalries, gave his feuding partners a 72-hour deadline last week to agree on reforms that could ward off economic crisis, hinting he may otherwise resign.


Lebanese officials were scrambling to finalise a plan to avert a financial meltdown as tens of thousands of protesters took to the streets nationwide for a fourth straight day, demanding the ouster of a political class that they blame for widespread corruption and worsening living standards, reported Bloomberg.

Prime Minister Hariri has accused his rivals of obstructing his reform measures that could unlock $11 billion in Western donor pledges and help avert economic collapse.

The reform decisions require a 50 per cent reduction in salaries of current and former presidents, ministers and MPs as well as cuts in benefits to state institutions and officials. It also requires Banque du Liban and private banks to contribute $3.3 billion to achieve a ‘near-zero deficit’ for the 2020 budget.

Similarly, the reform includes a plan to privatise the telecommunications sector and an overhaul of the costly and crumbling electricity sector, which poses one of the biggest strains on the country’s depleted finances.

The Lebanese finance minister said that the plan envisages contributions from banks to help lower public debt servicing without raising taxes on citizens.

Additionally, Wael Abou Faour, the Lebanese Industry Minister said that the proposals also include imposing a ‘wealth tax’ while leaving wages intact.

But those pledges have done little to end protests that broke out last week over a decision, later rescinded, to tax WhatsApp calls.

The cause of Lebanon’s protests bears a striking resemblance to upheavals sweeping the region from Algeria to Iraq—rising inequality, growing unemployment and accusations that the elite have lined their pocket at the expense of the nation.

The country’s sectarian politics and the influence of regional rivals such as Saudi Arabia and Iran, along with one of the world’s highest debt burdens, have made it harder for analysts to predict an easy way out.

Four ministers from a major Christian party, the Lebanese Forces, stood down over the weekend, saying they had no faith in the government’s ability to deliver.

Hezbollah and its allies, primarily the Free Patriotic Movement led by Foreign Minister Gebran Bassil, want to preserve the government, warning that the alternative would only lead to chaos. The Hezbollah coalition holds a majority in parliament and the cabinet.

Observers doubt that the planned road map would ease tension on the streets given that the magnitude of the demonstrations that have spread to regions known for their loyalty to political leaders such as the parliamentary speaker, Nabih Berri and Hasan Nasrallah.

Protesters have filled up the streets of the capital, insisting their demonstration is peaceful and non-sectarian and would continue until the fall of the government.






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