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The new Lebanese government held its first meeting, and the President called for the resumption of negotiations with the International Monetary Fund to help it recover from one of the world’s worst economic crises in more than a century.
The new Lebanese prime minister, Najib Mikati, who took office last week, said on Monday that there is no time to waste and no shortcuts to one of the worst economic collapses in history.
The new government formed more than a year after the political deadlock replaced the caretaker government that withdrew after a huge explosion in Beirut last year.
Mikati told the cabinet that realizing the people’s hope requires will, determination and planning.
“We really don’t have a magic wand. The situation is very difficult,” said the billionaire turned politician according to a statement.
The 24-member cabinet’s most urgent task in the coming weeks will be to help improve conditions in a country of 6 million people, including 1 million Syrian refugees.
The people of Lebanon hope that the new government will finally get out of the crisis, which has devalued the currency by about 90% since the end of 2019 and forced three-quarters of the population into poverty.
Mikati promised to work hard to solve the problem of fuel and medicine shortages. As the hard currency reserves of import-dependent countries have been exhausted, the supply of fuel and medicine has been exhausted.
The government will have to deal with public anger and tension caused by the removal of fuel subsidies by the end of the month.
Western governments, including the United States and France, welcomed the formation of the cabinet and urged it to promptly implement the reforms required by international banks before loans flow in.
“We need the help of the International Monetary Fund, the World Bank, regional and international funds,” President Michel Aoun, who has negotiated for months to approve the new government, told the cabinet. “Urgent and decisive steps need to be taken to initiate reform.”
Mikati has previously stated that resuming negotiations with the International Monetary Fund will be a priority. On Friday, he said that separatist politics must be put aside and that if he faces opposition at home, he will not be able to participate in the IMF talks.
To boost the government, the Lebanese Ministry of Finance stated that Lebanon will receive a total of US$1.135 billion in Special Drawing Rights (SDR) from the International Monetary Fund, exceeding the US$860 million expected as part of the IMF’s general distribution.
The ministry stated that in addition to the 860 million U.S. dollars in 2021, this amount also includes 275 million U.S. dollars in 2009, and added that the amount will be deposited into the central bank on September 16.
Zeina Khodr of Al Jazeera Beirut reported that Lebanon, as a shareholder of the International Monetary Fund, has special drawing rights. The more than $1 billion that Lebanon withdrew is “absolutely a lifeline,” but the question is how the government will use it.
“Will it continue to subsidize goods? This policy has been criticized for causing smugglers and importers to hoard fuel and create a black market?” Hoddle said.
“Or will it use this money to support 500,000 families, and these vulnerable families desperately need $100 in cash assistance every month?
“The economy has collapsed. More than 80% of the population is in poverty. The currency has collapsed. There are a lot of challenges ahead. But this one billion dollars—of course it will help—but it’s a short-term solution. The government needs to come up with a solution. It is a sustainable path to recovery,” Hoddle said.
Information Minister George Kodashi told reporters after the meeting that Prime Minister Najib Mikati plans to hold intensive cabinet meetings in an effort to improve the issue of “directly affecting citizens.”
Kordahi quoted Mikati as saying during the meeting, “People are seeking action and no longer care about negotiations and promises.”
Last year, negotiations at the International Monetary Fund broke down, and politicians and banks objected to the huge losses planned by the government’s fiscal recovery plan approved by the IMF. Aoun urged the government to incorporate the fiscal recovery plan into its policy plan, as well as reforms in a plan made by France last year.
The previous administration failed to implement the structural reforms that donors had been urging for years, including measures to address the country’s corruption and waste that was the root cause of the crisis.
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