Washington (agencies)
Yesterday, the United States welcomed the holding of parliamentary elections in Lebanon “without a major security incident”, and called on the political class to “quickly form” a government capable of “rescuing the economy and restoring confidence” in this country that is witnessing an unprecedented crisis.
“We congratulate the Lebanese for their participation in the voting process, despite the difficult circumstances,” State Department spokesman Ned Price said in a statement, praising the security forces for maintaining security.
He added, “We share the concern expressed by our partners in the international community regarding the issue of accusations of vote buying, favoritism and cases of intimidation.”
He continued, “We urge the country’s parliament and political leaders to listen to the Lebanese people’s call for change, and to work seriously and urgently on the necessary measures to save the economy.”
Hezbollah and its allies lost the majority in the new Lebanese parliament as a result of the parliamentary elections that took place last Sunday, which recorded the entry of independent opposition candidates emanating from the popular uprising that took place in 2019, to Parliament for the first time, in an unexpected size.
The elections are the first after an economic collapse that the World Bank has ranked among the worst in the world since 1850, and after a horrific explosion on August 4, 2020 in the port of Beirut, which killed more than two hundred people, destroyed neighborhoods in the capital, and resulted from the storage of huge quantities of dangerous materials without protective measures.
This came as the Lebanese Council of Ministers approved a plan for financial recovery in its last session, and stipulates that the government will cancel a “significant part” of the Banque du Liban’s foreign currency obligations towards commercial banks and dissolve non-viable banks by the end of November 2022.
The Lebanese cabinet approved the plan, which was seen by Reuters in its last session, hours before the government was transformed into a caretaker after the parliamentary elections.
The reforms included in the road map include plans to restructure the banking sector, and return some depositors’ savings in hard currency, which are among basic measures for the International Monetary Fund to release required financing.
In April, Lebanon reached an expert-level agreement with the International Monetary Fund to benefit from the Fund’s extended 46-month facility, according to which Lebanon requested access to the equivalent of about three billion dollars.
The plan foresees a full review of the central bank’s financial position by July. The plan stated: “In the beginning, we will cancel a large part of the Central Bank of Lebanon’s foreign currency obligations towards banks, in order to reduce the deficit in the capital of the Bank of Lebanon.”
As stated in the plan: “Determining the size of the needs for recapitalization of individual banks, reformulating their balance sheets, and we are working on an assessment of the losses of each bank separately, and an analysis of the deposit structure and deposit structure of the 14 largest banks (which represents 83 percent of assets) will be conducted The Banking Control Commission with the assistance of reputable international companies, including the participation of an external supervisor. This assessment will be completed by the end of September 2022.”
In addition, a complete internal recapitalization of banks will be carried out through “significant contributions” from bank shareholders and major depositors.
The plan said that it would “protect small depositors to the maximum extent possible in every viable bank,” but did not specify the minimum amount required to be protected, unlike previous draft plans.
She added that the government would unify the official exchange rate and end the existence of different exchange rates.
The collapse led to the inability of depositors to obtain their savings, and the local currency lost more than 90 percent of its value. The Association of Banks in Lebanon rejected an earlier draft of the plan last February, saying it would lead to a loss of confidence in the financial sector.
Lebanese banks have been a major lender to the government for decades, helping to finance a country whose practices were marred by profligacy and corruption and which suffered financial collapse in 2019.
For his part, His Excellency Al-Shami, Deputy Prime Minister of Lebanon, said that the Cabinet’s approval of the financial recovery plan, yesterday, is a “step forward”, but Parliament must quickly ratify a number of necessary legislation.
He continued, “Once the new parliament convenes, we hope that we will be able to approve these measures quickly, but as you know we cannot impose that on Parliament.”
Al-Shami added: “We can put what we see on paper, but we must ensure that whatever we have committed to will be implemented in the future.”
“I can’t predict whether they will do it or not, and whether there is the political will to do it,” he added.
Mikati confirms the protection of the rights of depositors
Yesterday, Lebanese Prime Minister Najib Mikati said that the country’s President, Michel Aoun, requested the continuation of the current government until a new government is formed, following the recent parliamentary elections.
In a televised speech, Mikati said that the elections “was conducted with absolute transparency,” adding, “They were conducted despite the lack of ink in the printing machines,” referring to the logistical difficulties.
The Lebanese Prime Minister stressed that his government is working to stop the economic collapse and protect the rights of depositors in Lebanese banks, and called on the Central Bank of Lebanon to set the required standards to ensure the growth of the economy.
Mikati reassured the Lebanese by saying that “the phase of the gradual recovery of the collapsed economy will begin as soon as possible,” noting that any delay in the financial recovery plan will be at a high cost to the Lebanese.
In his speech, the Lebanese Prime Minister stressed that “there is no rescue without an agreement with the International Monetary Fund.”
France regrets election irregularities
Yesterday, the French Ministry of Foreign Affairs expressed its regret for the irregularities and incidents that the European delegation monitored in the Lebanese parliamentary elections. The European Union Election Observation Mission presented its preliminary conclusion on May 17 in Beirut. The French Foreign Ministry said, “We regret the violations noted by the observer mission,” calling for it to shed light on the irregularities witnessed in the Lebanese parliamentary elections. “The gravity of the crisis that Lebanon is going through calls for urgent measures,” she added.
Paris called on the Lebanese authorities to appoint a prime minister and form a new government as soon as possible, in order to take the necessary measures for the country’s economic recovery, especially on the basis of the agreement signed with the International Monetary Fund.
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