The Cabinet Wednesday formed a ministerial team to negotiate with the International Monetary Fund, a key demand of donors, in a positive signal to the international community about the new government’s intention to press on with the talks with the IMF on a bailout package.
Headed by Deputy Premier Saadeh Shami, the team includes Finance Minister Youssef Khalil, Economy Minister Amin Salam, and two advisers to President Michel Aoun, Charbel Kardahi and Rafik Haddad, Information Minister George Kardahi told reporters after a Cabinet session chaired by Aoun at Baabda Palace.
In discussing a mechanism to increase electricity supplies in a country plagued by chronic power cuts for decades, the Cabinet decided to request a $200 million loan to purchase fuel for the state-run Electricite du Liban, the state-run National News Agency reported. Amid severe fuel shortages, EDL has warned that the country faced the threat of a total blackout by end-September amid dwindling fuel oil reserves.
Among other decisions, the Cabinet referred to the Judicial Council, the country’s highest judicial body, last month’s fuel tank explosion that killed at least 28 people and wounded over 70 others in Al-Tleil village in the northern Akkar region, Kardahi said.
The Cabinet also approved the Higher Defense Council’s recommendation for an extension of the “general mobilization” period designed to stem the spread of the coronavirus pandemic until the end of the year, Kardahi added.
In the first session since the Cabinet of 24 specialists formed by Prime Minister Najib Mikati gained a vote of confidence from Parliament last week, ministers addressed 11 items on the agenda, including more than 500 decrees and decisions passed in an extraordinary manner by the caretaker government of former Prime Minister Hassan Diab that needed to be approved by relevant ministers. Kardahi said the Cabinet approved those decrees and decisions.
Also on the agenda was a request to transfer LL16 billion from the state budget’s reserves to the Defense Ministry’s budget to pay salaries of military personnel until the end of the end of 2021.
Both Aoun and Mikati urged ministers to work hard to gain the confidence of the people and the international community by implementing the reform measures contained in the government’s policy statement and resolving the deepening economic and financial crisis.
Speaking during the Cabinet session, the two leaders urged ministers to tackle a series of crises facing the Lebanese, including an unprecedented economic meltdown and severe food, fuel and medicine shortages and chronic power cuts that have paralyzed normal life in the country in order to gain the people’s confidence.
Aoun congratulated ministers for winning Parliament’s vote of confidence, hoping the new government would gain the confidence of citizens and the international community.
“Confidence requires serious and speedy work to implement the policy statement according to a program of priorities starting with the daily life and living matters. The government must focus on meeting the citizens’ needs, including monitoring of prices and finalizing the cash subsidy card,” Aoun was quoted as saying.
Mikati said a big challenge facing the government is to gain the people’s confidence. “This can be achieved if we are one united working team,” he said during the Cabinet session.
“Giving the people their rights is a responsibility which all of us must bear. We must be committed to achieving the citizens’ rightful wishes, especially social security, and work quickly to fulfill the citizens’ needs, including the cash subsidy card, electricity, fuels and other essential matters,” Mikati said.
Mikati, who last week visited France and Britain on his first foreign trip as Lebanon’s prime minister, said the meeting with French President Emmanuel Macron was “very good.”
“He [Macron] showed remarkable concern with supporting Lebanon, affirming France’s readiness to help in more than one sector within complete transparency,” Mikati said. He added that Macron stressed that the “real door to salvation is the beginning of negotiations with the International Monetary Fund.”
During their talks at the Elysee Palace last week, Macron urged Mikati to undertake "urgent" reforms as a condition for the international community to extend promised aid to Lebanon. Macron said the reforms should include tackling power and other infrastructure problems, improving public finances, reducing corruption, and stabilizing the banking system. He also underlined the need for Lebanon to quickly resume talks with the IMF.
In a move seen as part of France’s attempts to support Lebanon, the Elysee Palace said Tuesday contacts would be made soon between Macron and Saudi Crown Prince Mohammad bin Salman to discuss the region’s problems, including the situation in Lebanon. Saudi Arabia, which wields great influence in Lebanon, so far has not commented on the new government nearly three weeks after its formation.
Lebanon began talks with the IMF on a $10 billion bailout package in May 2020, but the negotiations broke down after a dispute between different interest groups representing Lebanese banks and the government over the size of losses in the Central Bank.
Among the conditions set by the IMF is the lifting of subsidies on all essential items, Parliament’s approval of a capital control law, a unified currency exchange rate, restructuring of the public debt, restructuring of the banking sector, a forensic audit of the Central Bank’s accounts, curbing cross-border smuggling with Syria, overhauling the ailing electricity sector and streamlining the bloated public sector.
Less than three weeks in office, the new government faces a host of tough challenges that begin with halting the country’s economic collapse, embarking on essential reforms, resolving the severe food, fuel and medicine shortages and chronic power cuts and end with supervising next year’s parliamentary elections. This is in addition to restoring confidence between the people and the state and also with the international community, which has linked its financial aid to implementing structural reforms.
The European Union Ambassador to Lebanon Ralph Tarraf met Wednesday with Foreign Minister Abdullah Bou Habib, discussing matters of joint concern: addressing the economic crisis, delivering basic services to Lebanese citizens, governance reforms, next year’s parliamentary elections and refugees.
“We stand ready to work together with the Lebanese government based on its ministerial statement commitments,” Tarraf tweeted.
The Free Patriotic Movement’s parliamentary Strong Lebanon bloc called on the government to quickly begin modernizing its financial recovery plan and negotiating with the IMF on a rescue package.
“The bloc also calls on Parliament to quickly approve the necessary reform laws, such as the capital control law, recover the money transferred abroad, and reveal the accounts and properties of public employees, [a draft law on] the independence of the judiciary, a consumer protection law and other urgent laws,” said a statement issued after the bloc’s weekly online meeting chaired by MP Gebran Bassil, the head of the FPM.