On Tuesday, caretaker Prime Minister Hassan Diab stated that Lebanon can ration $2 billion in reserves left for subsidies to last six more months, amid the ongoing financial crisis that followed the Beirut explosion in August and the novel coronavirus pandemic.
During an interview with Reuters, Diab confessed that he only realised that his country was left with $2 billion in foreign reserves for subsidies after watching the TV comments by the Central Bank Governor Salameh last week. “I had asked him several times. Nothing official was received,” he said.
He further stressed upon the “ international decision” made by the western officials to not help Lebanon because of the involvement of the Iran-backed political party and militant group Hezbollah, in the country’s affairs.
Diab was appointed to succeed Saad Hariri as the PM of Lebanon on December 19, 2019, amidst the 2019 Lebanese protests also known as the October Revolution, which caused Hariri’s resignation. Observers argue that although Diab ran independently, he received support from Hezbollah—a Shia organisation designated as a terrorist group by Washington—and its allies in parliament, including the Free Patriotic Movement (FPM), a Maronite Christian party whose leaders have been blacklisted by the US for assisting the Iran-backed Hezbollah. However, since the August Beirut explosion, one of the biggest non-nuclear blasts on record, his cabinet has since served in a caretaker role.
The August tragedy destroyed large parts of the capital, killing 200 people and injuring nearly 6,500. The blast also deepened Lebanon’s already severe economic crisis, as it struggles with staggering inflation and rising rates of unemployment and poverty. The Lebanese pound has lost approximately 80% of its value against the US dollar to date, and the COVID-19 pandemic, coupled with political turmoil, is only threatening to make the situation worse. Further, the World Bank released a grim report at the beginning of December, stating that the country was in for a prolonged and “deliberate depression” due to inaction by the country’s political and financial authorities.
Diab also added that, last week, his cabinet had sent a report to the Parliament charting out four scenarios to replace subsidies with ration cards for 600,000 Lebanese families, or more than 2.5 million people. One of the options in the report included scrapping subsidies on fuel and wheat, but not flour, to give families $165 a month instead. It also cited “a need to ask for aid from donor states ... because 2021 will be a tough year”.
However, foreign donors have made it clear that they will not grant any further financial support to Lebanon until the country goes through a reform to overcome systematic corruption in the government institutions. In fact, aside from Western actors, Gulf monarchies that once came to Lebanon’s rescue have also grown alarmed by Hezbollah’s expanding influence.
PM Diab Says Lebanon Can Stretch $2bn in Reserves for Subsidies for Another Six Months
Prime Minister Hassan Diab admitted that he was not fully aware of the severity of the state’s financial crunch until last week.
December 31, 2020
Lebanese Prime Minister Hassan Diab SOURCE: YAHOO NEWS