Lebanese billionaire Najib Mikati was named as the Prime Minister (PM)-designate by President Michel Aoun on Thursday after receiving the highest number of votes in the parliament. Mikati, who is currently serving as the caretaker PM, vowed to secure a bailout deal with the International Monetary Fund (IMF) amid a deepening economic crisis.
Mikati received the support of 54 out of 128 lawmakers, while 25 voted for Nawaf Salam, who was Lebanon’s former ambassador to the United Nations. 46 MPs abstained from voting.
#BREAKING – Lebanon billionaire tycoon Najib Mikati secures enough votes to be named prime minister-designate – @Reuters count.
— Timour Azhari (@timourazhari) June 23, 2022
He has at least 50 out of 128 votes (may get 3 more)
Lowest number for a PM-designate in at least 25 years.
He got 72 last year.
Immediately after appointing Mikati as PM-designate, President Aoun instructed Mikati to form a government during a meeting with the PM and Speaker Nabi Berri at the Babda presidential palace in Beirut.
Thanking those who supported him for the post, Mikati said he will pick a cabinet after “consulting with the parliamentary blocs and independent MPs” and “propose a reshuffle of some ministers and portfolios.” He also promised to redouble efforts to reach a bailout agreement with the IMF.
He noted that “without an agreement with the IMF, rescue chances [for Lebanon’s economy] will not be available” and thus called on all political forces to show “historic responsibility” and “a constructive spirit.” While Mikati said that “the chances are still available to rescue what should be rescued,” he insisted that Lebanon “no longer has the luxury of time,” as the country is faced with two choices—“full collapse or gradual salvation.”
Lebanon's caretaker PM Najib Mikati will now be charged with breaking the political deadlock in parliament and forming a new govt pic.twitter.com/trxultKXuM
— TRT World Now (@TRTWorldNow) June 23, 2022
“I tell my country’s sons that my confidence in them is great […] We will not allow Lebanon to collapse and we will not waste time. Lebanon will not die and it will overcome its problems,” he declared.
Mikati was appointed to the post as former PM-designate Saad Hariri’s replacement in July 2021 and his cabinet was approved by the parliament in September.
Even though Lebanon is a parliamentary republic and primacy is given to the PM and his cabinet, the president can override many of the cabinet’s functions. Apart from being the commander-in-chief of the armed forces, the president has the power to appoint and dismiss the PM at his will, dissolve the parliament, and have a final voice over appointing a cabinet.
It was this difference in roles that led to differences between Hariri and Aoun, who blamed each other for preventing the formation of a new government. Hariri accused the pro-Hezbollah Aoun of allying with the militant group to obtain one-third of the cabinet seats based on sectarian and partisan lines. One-third of seats would give the alliance veto power over government decisions and policies.
Since taking over, Mikati has promised to bring in reforms to address Lebanon’s economic and political crisis, and restart talks with the IMF to rescue Lebanon from its economic meltdown.
In the elections that were held in May, no single party was able to secure a majority. However, the results were a major blow to militant group Hezbollah as many of its allies lost key seats. A wave of independent lawmakers was elected, including a record number of women.
— UNFPALebanon (@UNFPALebanon) June 23, 2022
While there has been some progress in talks with the IMF, the two sides have not been able to reach a final agreement, mainly due to opposition from different political blocs and Lebanon’s inability to institute some of the economic reforms that the IMF has demanded. An agreed-upon figure for the losses to Lebanon’s financial sector is a key first step toward progress in negotiations with the IMF.
While talks with the IMF broke down in 2020 after the government and the banking sector could not agree on the losses incurred as a result of the economic crisis, in October 2021, the government announced that it was resuming talks with the IMF. However, differences between the banking sector and the government over the correct estimate of losses continue to stymie talks with the IMF. In December, the government released an estimate that the financial sector has suffered $69 billion in losses, a figure that is disputed by the central bank, which is an independent body.
#Lebanon needs $15-20 billion for its economy to take off again, Central Bank Governor Riad Salameh tells @LBCI_NEWS.
— Kareem Chehayeb | كريم شهيب (@chehayebk) June 21, 2022
His range was $12-15bn last December, but that may have changed due to dwindling reserves and economic shocks from the war in Ukraine.
The IMF has promised to provide Lebanon with $3 billion worth of Special Drawing Rights (SDR) over a 46-month period if the government can institute a set of liberal reforms and outline a plan to end the country’s economic woes.
The World Bank has stated that the country’s economic crisis ranks as one of the worst that the world has witnessed in over 150 years. It has reported that “Lebanon is enduring a severe and prolonged economic depression, which is among the most severe crisis episodes globally since the mid-nineteenth century.”
With livelihoods in tatters and hopes almost shattered, the Lebanese are “hanging on by a thread” -- @rochdi_najat, @UN_Lebanon Humanitarian Coordinator@WorldBank estimates 🇱🇧 real GDP to fall by 🔻6.5% this year, while inflation has reached ⚠️ 890%
— UN Geneva (@UNGeneva) June 18, 2022
📖 https://t.co/QA09yCTzdf pic.twitter.com/AxqZSW1I6F
The Lebanese pound has lost almost 95% of its value, and three-quarters of its population is on the brink of poverty. The country is also facing severe food, medicine, and fuel shortages. The GDP growth rate has crashed by around 40%, unemployment levels have skyrocketed, and inflation has soared to almost 890% since the onset of the crisis.
The UN said last week that the Lebanese crisis has been exacerbated by the war in Ukraine, noting that there have been additional spikes in the prices of gasoline, diesel, and gas. “It threatens to tip thousands of families over the edge into food insecurity, malnutrition, and possibly hunger,” the world body said.