ANSD : Lebanon: Cabinet to rule on economic measures within few days

SUN 24 - 11 - 2024

Date: Aug 29, 2019
Source: The Daily Star

Lebanon: Cabinet to rule on economic measures within few days

BEIRUT: The government will decide on “difficult but necessary” measures to strengthen the Lebanese economy in the next few days, President Michel Aoun said Wednesday.

“The patient may not like the taste of medicine, but he must take it in order to recover,” Aoun said in reference to the government’s economic rescue plan, according to a statement from the presidency.

Cabinet is set to meet at 12:30 p.m. Thursday at Beiteddine Palace, Aoun’s summer residence.

Last week, global ratings agency Fitch downgraded Lebanon’s sovereign credit rating from B- (highly speculative) to CCC (substantial credit risk), while Standard and Poor’s maintained its rating of B-, nevertheless indicating that the “outlook remains negative.”

“This is the reality of things, we are no longer hiding [the truth] from the people as we did in the past,” Aoun said.

While Lebanon does not have a great deal of time to implement the necessary fiscal reforms, the president stressed that it will be possible to make a significant improvement to the country’s ailing economy.

S&P forecast a potential downgrade to Lebanon’s rating in the next six to 12 months if Lebanon does not take swift action to prevent banking deposits and the Central Bank’s foreign reserves from falling.

Beyond the downgrade, Lebanon is under pressure from the international community to make significant fiscal reform. As part of its pledge at the 2018 CEDRE conference, at which donors offered Lebanon more than $11 billion in grants and soft loans, the Lebanese government committed to reducing the budget deficit-to-GDP ratio by at least one percent every year for five years.

The 2019 state budget approved by Parliament in July projected a reduction in this ratio to 7.6 percent from more than 11 percent.

However, the global ratings agencies’ reports were skeptical over whether the austerity measures outlined in the budget would achieve the predicted reduction, and would instead reduce the deficit-to-GDP ratio to around 9 or 10 percent.

In order to ensure Lebanon is on the path toward economic recovery, politicians from all sides of the political spectrum must come together to solve what the president called a “national crisis.”

Lebanon’s political stability witnessed a period of uncertainty earlier in the summer following a shootout in Aley on June 30 that left two men dead.

Cabinet was held up for more than five weeks following the incident as ministers failed to agree on how to handle investigations.

Lebanese Democratic Party leader Talal Arslan and his allies have called for the Judicial Council, a specialized court for highly sensitive security cases, to handle the case; a demand vehemently opposed by rival Druze leader Walid Joumblatt, the head of the Progressive Socialist Party.

However, earlier this month Arslan and Joumblatt met for a “reconciliatory” meeting, prompting the president to say Wednesday that “what happened in [Aley] has been overcome.”

Capitalizing on this relative stability, Aoun said he had invited the heads of all Lebanese political parties to meet to discuss the economic crisis.

“We must all assume our responsibility,” he added.

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