PM Asks Government, Banks for Plan to Restore Confidence

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PM Asks Government, Banks for Plan to Restore Confidence

Prime Minister Hassan Diab asked the government and the country’s banks on Wednesday for a plan to restore confidence as the country faces its worst economic and financial crisis in decades.

At a meeting of ministers and banking officials, Diab said the impression he got from the central bank and banking association was Lebanon still had “ways out” of the crisis.

Diab’s cabinet took office last week with the backing of Iran-backed Hezbollah and its allies, after Saad al-Hariri quit as premier in October amid protests against the ruling elite.

The new government, which must still win a vote of confidence from parliament, faces a liquidity crunch that has fueled inflation, a weakening Lebanese pound and battered confidence in banks that have imposed tight controls.

Parliament speaker Nabih Berri said the new government would have a three- to four-month window after winning the confidence vote to implement a rescue plan, calling it “not impossible” as long as it avoided conflicts and tensions, according to broadcaster LBC.

Lebanon on Monday passed a 2020 budget that foresees a 7% deficit, but major questions surround revenue projections that the budget committee chief himself said may be unrealistic in light of the deteriorating economy.

The new cabinet must also decide its approach to looming sovereign bond repayments, including a $1.2 billion Eurobond maturing in March that the finance minister has described as “a fireball”.

A statement circulated at Wednesday’s meeting said Diab called for a plan “with the aim of restoring the minimum degree of confidence, which is the cornerstone for tackling the crisis.”

Source: Reuters

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