Lebanon Appeals for Import Aid; France to Hold Meeting

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Lebanon Appeals for Import Aid; France to Hold Meeting

Lebanon appealed to more friendly states on Saturday to help it import essential goods as it wrestles with an acute economic crisis and hard currency shortages, the office of caretaker Prime Minister Saad al-Hariri said.

The country had appealed to friendly states on Friday for the same purpose, and official sources said France would convene an international meeting next week to mobilize support for the country.

Hariri wrote to the leaders of Germany, Britain and Spain on Saturday to request help in securing credit for imports, having made the same appeal on Friday to Saudi Arabia, France, Russia, Turkey, the United States, China, and Egypt.

Lebanon’s economic crisis, the worst since its 1975-90 civil war, has spiraled into a financial crunch since the eruption of protests against the ruling elite in October, leading to hard currency shortages that have impeded imports.

The country has also been in a political crisis since Saad al-Hariri quit as prime minister more than five weeks ago, prompted by protests against ruling politicians over corruption.

Consensus emerged this week around businessman Samir Khatib as the new premier and he is expected to be designated on Monday unless Lebanon’s volatile politics brings surprises before then.

A new government is seen as a crucial step for Lebanon to chart a way out of the crisis and appeal for the help of foreign governments waiting for the new administration to take shape.

Hariri, running a caretaker government, issued his appeal to Saudi Arabia, France, Russia, Turkey, the United States, China, and Egypt, seeking help to finance imports of essential goods.

A statement said this was part of his efforts to address the liquidity shortage and to ensure “the continuity of food security and raw materials for production”.

Capital controls - which are being enforced by commercial banks but have not been formalized by the authorities - have led some importers to slash their orders as they have been unable to source dollars at the official rate or make transfers abroad.

The central bank has rationed dollars for wheat, fuel, and medicine, but buyers of these must still source 15% of the dollars, raising costs because of a slump in the Lebanese pound.

The pound firmed slightly on Friday, with dollars offered at 1,930 pounds compared to 1,980 on Thursday, but was still 28% weaker than the official rate of 1,507.5 pounds, dealers said.

The crisis is rooted state waste and corruption overseen by leaders using government resources for their own gain. Lebanon is one of the world’s most heavily indebted states.

Lebanon won international pledges of more than $11 billion in project financing last year on condition reforms are enacted.

France aims to mobilize international support at the conference which a European official and a Lebanese official said would take place in Paris on Dec. 11.

The meeting will gather representatives of the International Support Group which includes the five permanent members of the U.N. Security Council. Saudi Arabia and the United Arab Emirates were also expected to be invited, the Lebanese official said.

Source: Reuters