The International Support Group for Lebanon said on Wednesday that Lebanon must form a credible government that can implement urgent reforms if it is to receive international support and avoid a messy dissolution of its economy.
Lebanon, which has suffered its worst economic crisis since the civil war between 1975 and 1990, has been living with political paralysis since Saad Hariri resigned from the presidency of the government following massive protests against the ruling elite.
“In order to stop the sharp deterioration in the economy … there is an urgent need to adopt a package of sustainable, credible and comprehensive economic reform policies to restore balance and financial stability,” a final statement said after a meeting in Paris.
The group meeting was attended by the five permanent members of the UN Security Council, Germany, the UAE, the International Monetary Fund and the World Bank.
The group urged the Lebanese authorities to quickly adopt a “reliable budget for 2020” after forming a new government as “a first step in a multi-year financial program” and to fight corruption more rigorously.
Heavily indebted Lebanon received pledges of more than $ 11 billion during a conference last year, provided that reforms that it has not yet implemented are implemented. The protests since October 17 have roots in years of corruption and waste.
French Foreign Minister Jean-Yves Le Drian said that the commitment of the Lebanese authorities to an agreed road map was “essential”.
“Only this path, ladies and gentlemen, will allow all the participants around this table, and others, to act to provide the support that Lebanon needs and that we are ready to mobilize for the sake of this country,” said Ludrian.
Divided Lebanese community leaders are finding it difficult to agree on a new prime minister since Hariri’s resignation. Hariri, who is backed by the Gulf states and the West, says he will only return within a government limited to experts.
A diplomatic source said that the support group is determined not to provide any financial assistance until a credible government is formed, adding that “there will be no blank or rescue instrument.”
The finance minister of the Lebanese caretaker government said that a sharp decline in revenues in recent months means that the 2019 budget deficit will be “much larger” than expected.
And commercial banks in Lebanon imposed strict restrictions to prevent the displacement of capital, restricting the withdrawal of hard currency and almost preventing foreign transfers.
Moody’s cut the basic credit ratings of the three largest Lebanese banks – Odeh, Bloom and Byblos – after a directive from the central bank that would be half of interest payments on foreign currency deposits in Lebanese pounds.
Moody’s said the decision “implies a default in the payment of deposits based on the agency’s own tariffs.”