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Lebanon urges unity to tackle crisis, says time is short

Reuters , Wednesday 6 May 2020
Lebanon's Prime Minister Hassan Diab, wearing a mask, arrives to attend a meeting with Lebanese political leaders to present the plan aimed at steering the country out of a financial crisis, at the presidential palace in Baabda, Lebanon May 6, 2020. (Photo: Reuters)
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Lebanese must set aside their differences as the country has no time to lose in tackling its major financial crisis, Prime Minister Hassan Diab warned on Wednesday, saying a government recovery plan was not a sacred text and could be amended.

The government approved the plan last week, announcing that it would form the basis of negotiations with the International Monetary Fund (IMF) for aid.

Diab was speaking at a meeting of Lebanon's fractious sectarian leadership to review the plan, which maps out vast losses in the financial system. President Michel Aoun said the IMF was a "mandatory path" for recovery.

The government proposals have encountered strong criticism from the commercial banking sector which, according to the plan, is set to sustain losses of some $83.2 billion.

"Time is very precious. The accumulated losses are very big. The situation is very painful, and the chance to rectify (the situation) will not last long," Diab told the meeting convened at the presidential palace.

He urged political parties, economic syndicates and the banks to set aside differences. There was no place for score-settling, he said, adding that trading accusations would be "costly for all".

Diab's government was appointed in January with backing from the powerful, Iran-backed Shi'ite group Hezbollah and its allies including the Christian Maronite head of state, President Michel Aoun.

Leading Sunni politician Saad al-Hariri, a former prime minister and traditional ally of Gulf Arab and Western states, did not attend the meeting. Neither did Druze leader Walid Jumblatt though Aoun's Maronite rival, Samir Geagea, attended.

The crisis is seen as the greatest risk to stability since the 1975-90 civil war. The local currency has lost more than half its value since October and depositors have largely been shut out of their savings as dollars have become ever more scarce. Inflation, unemployment and poverty have soared.

Lebanon defaulted on its sovereign debt in March.

Addressing the meeting, Finance Minister Ghazi Wazni said Lebanon had started negotiations to restructure its sovereign debt two weeks ago.

The benefits of going to the IMF included boosting international confidence in Lebanon and the provision of financial support of $9-$10 billion for the treasury, he said.

The plan adopts a flexible exchange rate in the coming phase but in "a gradual and studied" way, Wazni said. He said floating the exchange rate before restoring confidence and securing international support would lead to a big deterioration in the value of the pound, among other negative consequences.

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