FRI 22 - 11 - 2019
 
Date: Sep 30, 2019
Source: The Daily Star
Protesters paralyze life in Beirut over economic woes
Central Bank securing foreign currency needs, Salameh assures Aoun
Hussein Dakroub| The Daily Star
BEIRUT: Enraged by the worsening economic conditions in the country, hundreds of people Sunday blocked main roads in Downtown Beirut and other cities with burning tires and garbage bins, in the latest popular outcry against the political class’ failure to act to remedy the situation.

Around 500 protesters, mainly civil activists who did not belong to any of the main political parties represented in the government, clashed with riot police after they attempted to break through security barriers and storm their way into the Grand Serail and the nearby Parliament in Downtown Beirut.

At least five protesters were injured in the scuffles with riot police and security forces, witnesses said.

Sunday’s street demonstrations, reminiscent of similar but larger protests staged in the past by thousands of civil society groups against the government’s failure to resolve the dire economic crisis, came amid growing fears of the Lebanese pound’s devaluation as a result of a dollar shortage in the market and possible prices hikes.

Interior Minister Raya El Hassan defended the people’s right to demonstrate, but criticized the protesters’ resort to rioting.

“I understand the people’s complaints about the difficult economic and financial situation. I am certainly with the freedom of demonstration and expression, but I don’t understand the pictures of burning [tires], smashing [cars] and insults that distort any popular movement,” Hassan tweeted.

She was apparently referring to some protesters who were seen throwing stones at riot police and parked vehicles in Bechara Khoury thoroughfare in central Beirut.

Hassan praised security agencies for their efforts during “this long and hard day” not to allow anyone to take the protests away from their real objective. “But at the same time, I will not accept any security member to attack any citizen,” Hassan added.

By nightfall Sunday, all roads blocked by protesters in Beirut and other cities had been reopened by security forces and traffic was back to normal in Downtown Beirut after the protesters quit the area.Shouting anti-government slogans and calling for the downfall of the regime, the protesters, some waving Lebanese flags, had gathered earlier in the day in Martyrs’ Square to protest Lebanon’s poor economic situation. Over a hundred riot police and Internal Security Forces members were deployed to protect state buildings in the area.

The protesters marched from Martyrs’ Square in an attempt to enter Parliament, which is nearby. However, all the entrances of Nijmeh Square - where Parliament is located - were sealed off by barriers and riot police.

The protesters then walked to Riad al-Solh Square below the Grand Serail, where they briefly clashed with riot police, who pushed them back with shields and batons. Some protesters remained outside the Grand Serail while others returned to Martyrs’ Square.

Venting their spleen against the entire political class, some of the protesters shouted: “Revolution, revolution,” and “Government, Parliament ... Thieves, thieves!” Others chanted a popular refrain of the 2011 Arab Spring protests across the Arab world: “The people want the downfall of the regime.”

Sunday’s protests came two days after a gas station strike had threatened to cause chaos throughout Lebanon.

Fears of a dollar shortage have sparked anxiety over a possible devaluation of the Lebanese pound and price hikes. Lebanese media reported that banks and money exchange houses were rationing their sales of dollars, which are used alongside the pound in daily transactions.

Nevertheless, Central Bank Gov. Riad Salameh has repeatedly said that there is no “dollar crisis” and that the U.S. currency is available in banks.

The strike came to a swift end Friday following an agreement reached between Prime Minister Saad Hariri and gas station owners that helped placate rising concerns over the financial situation in the country. The deal would allow gas station owners to purchase fuel in Lebanese pounds.

The protests also came as Lebanon is coming under international pressure to carry out a string of key structural economic and fiscal reforms deemed essential to unlock over $11 billion in grants and soft loans pledged by international donors at last year’s CEDRE conference. The reforms are designed to rescue the ailing economy, burdened by a soaring national debt of over $85 billion - more than 150 percent of gross domestic product, an endemic budget deficit, slow growth and a 35 percent unemployment rate.

A confluence of recent events has raised awareness of the country’s precarious economic and financial situation. The ability of the state to service its public debt has been called into question, setting off a wave of austerity measures by authorities.

At the same time, an apparent dearth of U.S. dollars in the highly dollarized economy has led to unofficial exchange rates considerably higher than the authorized trading band of LL1,501-1,514 to the dollar. Were the pound to devalue, it would harm many state workers, pensioners and other retirees.

Amid these concerns, the economy has not expanded in 2019, and saw growth of just a quarter of a percent in 2018.

Scores of people briefly blocked a main road in Baalbeck, protesting the deteriorating economic situation.

Protesters also partially cut off the Sidon-Tyre highway and the Metn highway to Baabdat with burning tires, the state-run National News Agency reported.

A group of young people blocked the international Chtoura-Zahle-Baalbeck road before a Lebanese Army force intervened to reopen it.

In the northern city of Tripoli, protesters marched in the city’s Al Nour Square, chanting slogans against the government’s economic policies and calling for its downfall, the NNA reported.

Meanwhile, a Cabinet session, scheduled to be held at the Grand Serail Monday to continue discussion of the draft 2020 state budget, has been postponed until Tuesday, according to a statement from Hariri’s media office. It said the postponement came after Hariri left Beirut for Paris Sunday to represent Lebanon at the funeral of former French President Jacques Chirac, which would be held Monday.

In its last meeting Thursday, the Cabinet approved cuts in the expenditures for several ministries. It has promised to expedite the budget discussion in order to send it to Parliament next month for final ratification.

Hariri previously said that the 2020 budget would not contain any new taxes and was part of a three-year plan to stimulate the stagnant economy.

But Telecommunications Minister Mohammad Choucair, a member of a ministerial committee tasked with proposing “essential” economic reforms hinted last week at the possibility of imposing new taxes that would go alongside the 2020 budget as part of the government’s efforts to generate revenues and reduce the deficit.

Hariri also declared that the government planned to reduce the budget deficit to 7.6 percent of gross domestic product, down from more than 11 percent in 2018.

Central Bank securing foreign currency needs, Salameh assures Aoun

The Daily Star
BEIRUT: Central Bank Gov. Riad Salameh sought to calm worries over the exchange rate and vital imports Monday after a meeting with President Michel Aoun in Baabda.

The Central Bank is “securing the foreign currency needs of the private and public sectors,” Salameh said, according to the office of the president.

Private companies in several sectors have expressed increasing concern in recent weeks as dollars have become scarce. Importers in particular need dollars to pay foreign suppliers.

The concern is particularly acute for imports of wheat, medicine and fuel. Gas station owners have gone on strike twice in the past two weeks over difficulties in converting Lebanese pounds, which customers use to pay, to dollars, which are used to purchase fuel. The demand for dollars has created a parallel market in which the dollar is worth considerably more than the official exchange rate of about LL1,500.

In his meeting in Baabda, Salameh reiterated his plan to announce a mechanism Tuesday that will allow the imports of fuel, medication and wheat at the official exchange rate.

“The Central Bank will issue a circular to secure dollars for Lebanese banks at the official rate ... to allow the import of fuel, medicine and wheat through a mechanism [that will be] outlined in the circular,” Salameh said, according to a tweet from the office of the president.

Details of the mechanism have not been made public, but Salameh said that the Central Bank would not be working with importers directly, but rather with banks.

Salameh's meeting with the president comes the day after hundreds of protesters took to the streets in Beirut, Tripoli, Sidon and the Bekaa Valley in anger over the country's bleak economic situation. Protesters in Beirut chanted, "Down with the [Central] Bank rule," among other slogans.

In addition to concerns over the exchange rate and stability of the pound, the state has embarked on a series of austerity measures due to its high level of sovereign debt and the insistence of international donors. Meanwhile, the economy has experienced extremely low growth rates over the past five years. Last year, the economy grew just a quarter of a percent. It is unclear whether there will be any growth at all in 2019; the country could see a contraction.

In addition to supporting the foreign currency needs of the private sector, the Central Bank is providing the dollars needed by the government. In April and May, the Central Bank covered the repayment of $1.15 billion in state debt.

Another $1.5 billion Eurobond matures on Nov. 28. Over $500 million in interest on other Eurobonds is also due in the month of November.

Finance Minister Ali Hasan Khalil said last week that the government was preparing to issue a $2 billion Eurobond in October. However, the ministry had also been planning a Eurobond issuance earlier this year before high interest rates caused it to turn to the Central Bank instead.

After November's dollar payments, the government's next major foreign currency bill will come due in March 2020. Between March and June, the government is due to pay over $3.3 billion in debt servicing and principal repayment.

The Central Bank had foreign exchange reserves of $31 billion as of July.


 
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