Serious indicators of worsening economic situation, fears of social unrest in Lebanon

LEBANON CENTRAL BANKAs the Lebanese government is working on the 2018 budget, which will be submitted to Parliament for adoption before the upcoming Cedar Conference in Paris next month, indicators of the country’s financial and economic performance are worrying, amid a looming social crisis.

Finance Minister Ali Hassan Khalil said on Friday that Lebanon was facing a “real economic and financial crisis,” pointing to “a very delicate and dangerous stage.”

However, Khalil said: “Despite the difficulty of the crisis, it remains controllable, if there is a real political will to reorganize our affairs, and put ourselves on the path of real management.”

Khalil stressed that the situation could only be resolved through the adoption of the state budget and setting a necessary reform track.

His statements came during a conference on Financial Crimes organized by the Lebanese International University. The minister noted that international conferences could not yield positively on the economic situation, without being accompanied by real measures, primarily the adoption of the budget that would include effective reform plans.

Despite the negative indicators surrounding the financial and economic situation, President Michel Aoun highlighted “success in launching the process of regulating the state’s finances”, noting that work was underway to reveal an economic plan that sets a long-term vision for development.

Minister of Economy and Trade Raed Khoury has recently signed a contract with McKinsey Company, worth $1.3 million, to prepare an economic plan for the country after it approved the first budget since 2005 at the end of 2017. However, until now, nothing is clear about Lebanon’s plan that would be submitted to the Paris conference in the second half of April.

Recent crises emerged with the increase in the salaries of public sector employees and teachers in public and private schools, which has sparked objections in private schools, under school administrations’ assertion that they could not cover the rise, and parents categorically refusing to pay it.

In addition, recent cessation by banks to provide housing loans, as a result of the depletion of funds allocated by the Central Bank, threatens to cause a major social crisis, as the largest number of young Lebanese depends on these loans to buy apartments.

“All these crises, coupled with the absence of a real reform plan and the continued indiscriminate spending, whether through fictitious societies or through fictional rents to a number of institutions and ministries, might lead to a social unrest, especially in light of the accumulation of problems,” Beshara Asmar, head of the General Labor Union, told Asharq Al-Awsat.

“Instead of resorting to real measures to put an end to the deterioration of the situation, by managing the $10 billion waste of funds per year according to the World Bank, the government is facing the crises by accumulating more debts through the upcoming international conferences,” he added.