Lebanon cabinet approves financial rescue plan, parliament to vote on the new govt next Tuesday

Reuters , Thursday 6 Feb 2020

Lebanon's President Michel Aoun heads a cabinet meeting at the presidential palace in Baabda, Lebanon February 6, 2020. (Photo: Reuters)

Lebanon's government on Thursday approved a rescue plan to pull the country from its worst economic and financial crisis in decades and it must now win a vote of confidence in parliament.

A draft policy statement seen by Reuters on Sunday outlined broad plans, including reducing interest rates, recapitalising banks, restructuring the public sector and seeking support from foreign donors.

Prime Minister Hassan Diab urged European states to open a credit line and provide aid to rescue his country.

"Lebanon needs urgent help today at various levels, power, food supplies, raw materials," he told a meeting of European ambassadors.

Foreign donors have said they stand ready to support Lebanon only if it implements long-stalled reforms.

The UN Special Coordinator for Lebanon, Jan Kubis, said this week that a clear and transparent action plan was needed.

"If you don't help yourselves, why do you expect assistance from the outside world?" he told local media.

The information minister said the cabinet approved the rescue plan on Thursday with some amendments, which ministerial sources said were minor.

It was not immediately clear what changes were made to the 17-page statement, due to be presented on Tuesday in parliament for the new government to secure a vote of confidence.

Lebanon's Parliament Speaker Nabih Berri called for a session to be held next week, on Tuesday and Wednesday, to vote on the new government and its policy statement.

Diab's cabinet was formed last month by the Iran-backed Hezbollah movement and its political allies, which hold a parliamentary majority. It took office nearly three months after Saad al-Hariri's government resigned under pressure from sweeping protests against a ruling elite that has failed for decades to tackle waste and corruption.

Hezbollah's parliamentary bloc said on Thursday that decisions on the country's debt maturities in coming months would need national consensus.

"Radical (moves)... require a national decision and popular understanding," it said in a televised statement.

Cash-strapped authorities are struggling to decide whether to repay a $1.2 billion Eurobond maturing in March, political and banking sources told Reuters this week.

The government is facing a liquidity crunch, shattered confidence in banks which have imposed informal controls, a weakened Lebanese pound and soaring inflation.

"It is imperative to start work immediately to make up for lost time," President Michel Aoun's office quoted him as saying on Thursday.

Finance Minister Ghazi Wazni will meet a World Bank delegation on Friday, his office said.

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