ANSD : EU envoy to Lebanon links financial aid to govt performance

FRI 19 - 4 - 2024

Date: Feb 4, 2020
Source: The Daily Star

EU envoy to Lebanon links financial aid to govt performance

_{Hussein Dakroub| The Daily Star}
BEIRUT: The international community is watching the new government’s performance and its reform program to decide whether to extend desperately needed financial aid to Lebanon as it grapples with the worst economic crisis in decades, the European Union’s representative to Lebanon said Monday.

The remarks by Ralph Tarraf during a meeting with Interior Minister Mohammad Fahmi were the latest call by foreign powers on Prime Minister Hassan Diab’s government to move on with enacting a series of key economic and financial reforms as a condition for extending financial aid to the protest-hit and cash-strapped country.

“The international community is watching the new government and its pattern of work. The more the government’s plan of action is clear, the more the international community is ready to extend support,” Tarraf said, according to the state-run National News Agency.

Tarraf pointed out that previous governments had failed to honor their pledges toward the international community to carry out reforms that Lebanon promised at the CEDRE conference held in Paris in April 2018.The reforms are deemed essential to release over $11 billion in grants and soft loans pledged by donor countries at the conference to finance the implementation of vital infrastructure projects in Lebanon.

Tarraf said after meeting with Diab last week that the EU was ready to support Lebanon if the new government enacted reforms.

Fahmi told Tarraf that security in Lebanon, which has been rocked by an unprecedented popular uprising against the entrenched political class since Oct. 17, was “extremely important for the current government.”

“But priority now is for the economic situation and how to overcome this crisis,” Fahmi said, according to the NNA.

Meanwhile, the Cabinet is slated to meet at Baabda Palace Thursday to endorse the final version of the government’s policy statement and later refer it to Parliament for a vote of confidence, Information Minister Manal Abdel Samad said.

She spoke to reporters after a ministerial committee tasked with drafting the government’s policy statement made a final reading of the draft during a six-hour meeting chaired by Diab at the Grand Serail.

During the meeting, Diab telephoned President Michel Aoun and the two agreed to convene the Cabinet Thursday for a final approval of the draft policy statement.

Diab stressed that the government wants to work as soon as possible in order to put the policy statement into effect, Abdel Samad said.

“The government is committed to the [policy statement’s] provisions and will do its best to achieve the start of an effective government that fulfills the aspirations of the Lebanese to tackle the financial, economic, social and living crises,” Diab said, according to the information minister’s statement.

Asked to comment on the leaked copies of the government’s policy statement that calls for “painful steps” and interest rate cuts as part of a “comprehensive rescue plan” to avert a total collapse of the country’s ailing economy, Abdel Samad said: “We don’t adopt any draft that has been leaked. The [policy] statement’s path is to concentrate on crippling living, economic and financial issues that worry citizens. This was the gist of the committee’s discussions.”

She added that the policy statement did not contain any taxes. “There is no taxation amendment. But there are taxation and monetary reforms,” she said.

Abdel Samad said the policy statement took into consideration “all demands made by street protesters” since last October. “We know the pain of the people and they are all waiting for the policy statement that fulfills their demands,” she added.

Since Diab formed a 20-member Cabinet of specialists on Jan. 21, hundreds of protesters staged sit-ins and demonstrations in squares in Downtown Beirut and other areas to voice their rejection of the new government coined “one- sided” because it was made up of Hezbollah and its allies.

The protesters have demanded, among other things, a change in the decades-old sectarian governing system, fighting corruption and waste of public funds, the ouster of the entire political elite they accuse of corruption and mismanagement and early parliamentary elections.

However, the government’s draft policy statement, while calling for a new electoral law, made no mention of early parliamentary elections.

Speaking to reporters after the committee’s meeting, Industry Minister Imad Hoballah, one of two Hezbollah ministers in Diab’s Cabinet, said: “You will see something completely different from the leaked policy statement.”

Social Affairs and Tourism Minister Ramzi Musharrafieh said after the committee’s meeting there was no substantial amendment to the draft policy statement. “The political clause [in the policy statement] was not changed,” he said, referring to previous governments’ commitment to the policy of dissociation from regional conflicts, as well as the right of the Lebanese to liberate Lebanese lands that are still under Israeli occupation in the south.

Earlier Monday, Diab chaired a financial session at the Grand Serail as part of a series of marathon economic meetings to draw up an economic vision that is expected to be the main foundation of the Cabinet’s policy statement. The meeting was attended by Minister of State for Administrative Reform Damianos Kattar, Finance Minister Ghazi Wazni, Industry Minister Imad Hoballah, Economy Minister Raoul Nehme and Central Bank Gov. Riad Salameh.

The new government is facing one of the worst economic and financial crises since the end of the 1975-90 Civil War. The crisis has also shaken confidence in banks, which have imposed tight restrictions on cash withdrawals and transfers overseas, and raised concerns over the country’s ability to repay its huge debt, estimated at more than $88 billion, or 150 percent of GDP.

Meanwhile, Parliament Speaker Nabih Berri and Diab signed the 2020 state budget law that was passed by Parliament last week. The budget has now been referred to the presidency for a final signature.

Parliament endorsed the 2020 budget on Jan. 27, amid a rift over the constitutionality of the session with a new government that has yet to gain the legislature’s vote of confidence.

Diab had said his government would not obstruct the 2020 budget that was prepared by Saad Hariri’s fallen government.

The Future Movement MPs who were in attendance voted against the budget, which was passed by Hariri's government prior to him stepping down under the pressure of street protests last October.

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