ANSD : Lebanon: Cabinet to resume talks on economic plan as haircut opposition mounts

FRI 19 - 4 - 2024

Date: Apr 14, 2020
Source: The Daily Star

Lebanon: Cabinet to resume talks on economic plan as haircut opposition mounts

Berri reiterates opposition to leaked rescue plan

_{Hussein Dakroub| The Daily Star}
BEIRUT: The Cabinet is set to resume Tuesday talks on a controversial economic and financial rescue plan that has unleashed a wave of opposition and protests from top political and religious leaders for reportedly targeting the people’s bank deposits, including a potential haircut.

The Cabinet session, to be chaired by Prime Minister Hassan Diab at 1:30 pm at the Grand Serail, will follow up on discussion of the financial and monetary situation, including the economic rescue plan, the state-run National News Agency reported.

The government's agenda also includes a request by State Minister for Administrative Reform Damanios Kattar to renew work in the solid waste management project and add new centers, the NNA said.

The Cabinet has stepped up discussions on long-delayed reforms as part of a plan to ease the crippling economic and financial crisis and salvage the country’s ailing economy. The plan essentially calls for a restructuring of the soaring public debt, the shaken banking sector and the Central Bank.

Cabinet sessions on the economic plan come amid renewed pressure by the international community on Lebanon to enact a series of key economic and fiscal reforms. The reforms are deemed essential for unlocking over $11 billion in grants and soft loans pledged by international donors at the CEDRE conference hosted by France in 2018 to bolster the country’s economy and finance key infrastructure projects.

However, the government’s much-touted economic rescue blueprint has hit snags in the face of escalating opposition even before being endorsed by the Cabinet and Parliament.

Lebanon’s Muslim and Christian religious leaders Monday joined several politicians in rejecting the plan for reportedly targeting the people’s bank deposits, further reflecting the difficulties facing the blueprint. They called on the government to recover the millions of dollars in looted public funds instead of touching citizens’ life savings in banks.

Soon after its details were leaked last week, the rescue plan came under fire from officials on both sides of the political divide for reportedly targeting depositors’ money.

The blueprint has jolted Lebanon, which is already struggling with the worst economic and financial crisis since the end of the 1975-90 Civil War, and is also locked in a fierce battle against the coronavirus pandemic that has so far infected 637 people and killed 20.

The majority of the Lebanese are growing increasingly worried about potentially seeing their life savings in banks vanish or at least being seized by the government as the only way to repay over $90 billion in public debt and overcome the economic crisis.

“Dar al-Fatwa [seat of the Sunni mufti] will not accept any measure, position or decision dealing with the people’s savings and money which they have gained legally through hard work. The state’s role is to protect the people and protect their savings and their rights with all its potentials and energies instead of depriving them of their life savings,” Grand Mufti Sheikh Abdel-Latif Derian said in a statement marking the 45th anniversary of the outbreak of the 1975-90 Civil War on April 13.

Derian, the country’s top Sunni religious authority, warned that depriving the people of their life savings would lead to the “destruction of society and morals as well as the spread of chaos.”

Referring to the much-feared haircut on bank deposits, the mufti said: “By whose right will the depositors’ money be cut while there is looted money about which we know nothing so far. Citizens must not be the victims. Rather, citizens must be protected and their savings secured. This is the government’s duty.”

In a statement on the same occasion, Sheikh Abdel Amir Qabalan, head of the Higher Islamic Shiite Council, also called on the government to protect the people’s bank savings.

“One of the government’s first duties is to preserve the citizens’ financial rights by protecting their savings in banks, stabilizing the Lebanese currency's exchange rate [against the U.S. dollar], and launching a rescue plan for economic revitalization to avert an [economic] collapse,” Qabalan said in the statement carried by the NNA.

He also urged the government to carry out reforms based on “transparency, accountability, recovering looted public funds and fighting corruption.”

In his Easter address Saturday, Maronite Patriarch Beshara Rai called on the government to protect citizens’ deposits. “Lebanon should collect taxes while preserving citizens’ money in banks, Rai said. “The country has been looted.”

Finance Minister Ghazi Wazni has said that the government’s top priority is to recover the stolen and smuggled money estimated between $7 billion and $8 billion.

An official source ruled out any haircut on bank deposits following the widening political and public opposition to the economic plan.

“There will be no haircut. The talk about a haircut was preemptive and was intended to sound out public and political reactions. President Michel Aoun is also against a haircut and will not agree to it,” the source told The Daily Star.

The source added that the government had probably planned to proceed with a haircut on bank deposits. “But after seeing the widespread negative reactions to it, they will withdraw it,” the source said.

So far, the government’s economic plan has come under fire from Speaker Nabih Berri, former Prime Minister Saad Hariri, Progressive Socialist Party leader Walid Joumblatt and Lebanese Forces head Samir Geagea, all of whom have said they rejected touching the people’s bank deposits. Hariri and Joumblatt have accused the government of seeking to take control of the depositors’ money.

Berri reiterates opposition to leaked rescue plan

_{The Daily Star}
BEIRUT: Parliament Speaker Nabih Berri reiterated Tuesday his opposition to a leaked governmental proposal to convert the money of large depositors into bank equity as a way to recapitalize Lebanon’s all-but-bankrupt banking sector.

Speaking to local newspaper Al-Joumhouria about the leaked plan, which was drafted by consultants from Lazard, the government’s financial advisory firm, Berri said: “This plan is not the plan of the Finance Ministry and we do not agree with it at all.

“In any case, confiscating people’s deposits will not pass. We were among the staunchest supporters of suspending the payment of Eurobond maturities and we are now among the staunchest opposed to a ‘haircut’ and touching the people’s deposits, which have nothing to do with the situation we have reached.”

Lebanon on March 8 announced its decision to default on a $1.2 billion Eurobond payment and enter into negotiations to restructure the remaining $31 billion and the rest of the country’s soaring public debt. In announcing the plan, Prime Minister Hassan Diab also said he would consolidate Lebanon’s bloated banking sector, which he described as “four times the size of the economy.”

On restructuring the banking sector, Berri told Al-Joumhouria: “I am not at all with hitting the banking sector because there can be no resurrection of any economy without a strong and sound banking sector, but every one who wronged the sector was part of the system of corruption, waste and smuggling of money, and must bear responsibility for what they have done.”

Readers Comments (0)

Add your comment

Enter the security code below*


Can't read this? Try Another.