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Lebanon Signs Request for IMF Assistance, Protests Persist

Lebanon Signs Request for IMF Assistance, Protests Persist

Friday, 1 May, 2020 - 17:00
Lebanon's Prime Minister Hassan Diab signs a request for assistance from the IMF at the government palace in Beirut, Lebanon May 1, 2020. (Dalati & Nohra)
Asharq Al-Awsat

Lebanon’s government on Friday signed a request for assistance from the International Monetary Fund, a statement from Prime Minister Hassan Diab’s office said.

“This is a historic moment in the history of Lebanon. We have taken the first step on the path of saving Lebanon from the deep financial gap; and it would be difficult to get out of it without efficient and impactful help,” the statement said.

Beirut passed an economic rescue plan on Thursday and said it would be the basis for seeking IMF help.

Lebanon must now enact painful steps and work out how it distributes the costs, with the country’s banks likely to be particularly hard hit.

Although economists and diplomats welcomed the plan as a critical first step, many were skeptical that ambitious proposals to cut public sector spending and overhaul the banking sector could be enacted after years of political wrangling.

France said on Friday it was urgent that Lebanon implement reforms.

“It is on this basis that France stands ready to support the efforts of Lebanon,” Foreign ministry spokeswoman Agnes von der Muhll said in a statement.

Hundreds of Lebanese rallied Friday outside the central bank in Beirut and in elsewhere in the country.

The protesters decried the authorities for their handling of the unprecedented crisis that saw the local currency crash, devastate their savings and send prices and inflation soaring. Scuffles broke out outside a private bank and troops were seen beating and pulling away at least one protester.

The government “is not even providing the most basic needs," said a protester in Beirut, Ahmad Demashqia. There were also rallies in northern and southern Lebanon to commemorated May Day, the international Labor Day.

In the southern city of Sidon, 19-year-old Omar al-Mughrabi said the country needs radical change — not reform of failing or ineffective policies.

“Going to the IMF is not the solution," al-Mughrabi said “We don't need any more debts than we already have.”

Lebanon, one of the most indebted nations in the world, defaulted for the first time in March on its sovereign debt. Anti-government protests that erupted in October subsided during a nationwide lockdown since mid-March to blunt the spread of the coronavirus. Lebanon, a country of 5 million people, has reported only 729 cases and 24 deaths, and began to ease some virus restrictions this week.

Many, but not all, of the protesters wore face masks against the virus.

But the lockdown also worsened the recession's sharp bite, increasing unemployment and popular resentment. In recent days, protesters ignored social distancing measures and calls to stay home to rally outside the central bank and private banks, setting off clashes with the security forces and the army. In the northern city of Tripoli, a protester was killed earlier this week.

Prices of basic goods have increased, in some cases by over 60%. The Lebanese pound, pegged to the dollar for 30 years, lost nearly 60% of its value.

With a stable national currency, the Lebanese had used their pound and the dollar interchangeably, many keeping their savings in dollars. To deal with a liquidity crunch and a massive imports bill, the central bank decreed that most withdrawals could only be in the local currency. The decision further weakened the pound, sending it plunging on the black market to nearly three times the official rate.

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