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Lebanese no longer have confidence in state, PM admits amid debt crisis

Lebanon's debt levels remains among the highest in the world [Getty]

Date of publication: 2 March, 2020

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Lebanese authorities have lost the people's confidence, Prime Minister Hassan Diab admitted on Monday, as the country struggles to contain its economic meltdown.

Lebanese Prime Minister Hassan Diab on Monday admitted that the state had lost the people's confidence after months of anti-government protests and an economic meltdown.

In the coming days crisis-hit Lebanon must decide whether to repay $1.2 billion in Eurobonds due on 9 March or, as is widely expected, restructure its debt, Diab said.

The government formed in January inherited a disastrous economic situation and faces an impossible balancing act between the traditional powerbrokers who voted it in and a street that wants all of its ruling elite out.

Read also: Lebanon 'kick queen' protest icon to face military trial

"To put it frankly, the state, in view of its current situation, is no more capable of protecting the Lebanese people and ensuring a decent life for them," Diab said.

"To be transparent, I would say that this state has lost Lebanese people's confidence," he said in a speech to Lebanon's honorary consular corps.

He said the government was holding "a ball of fire" but added he was ready to undertake the painful changes needed to rebuild confidence and sound institutions.

"We have no choice but to take the path of the Calvary, whatever the sufferings, because other options are much more dangerous," Diab said.

Lebanon's banks are almost alone in arguing against default, a move that would further deplete rock-bottom foreign reserves.

Last month, the International Monetary Fund dispatched an emergency mission to advise the government but the institution's role has so far only been technical.

"In the coming days, the government will adopt a crucial decision that is very sensitive and critical. It is still under scrutiny, as it represents a major milestone in shaping the future of Lebanon," Diab said.

Hezbollah expressed opposition to IMF involvement in Lebanon's financial crisis, according to a Reuters report.

"We will not accept submitting to (imperialist) tools ... meaning we do not accept submitting to the International Monetary Fund to manage the crisis," said Hezbollah deputy leader Sheikh Naim Qassem, according to Reuters.

"Yes, there is nothing to prevent consultation... and this is what the Lebanese government is doing."

Read also: Lebanon could implode without serious government reforms, warns World Bank

Lebanon's debt levels remains among the highest in the world. A liquidity crunch brought the crisis to a head, with banks imposing tough restrictions on dollar withdrawals.

The Lebanese pound, which has been pegged to the dollar since 1997, has plummeted, bringing further woes for the import-dependent economy.

The economic crisis has triggered widespread protests since last year.

Last month, a World Bank representative told Bloomberg that Lebanon could implode unless it develops a new governance strategy with less corruption and more transparency.

"Politicians need to stop and listen," Ferid Belhaj, the World Bank's most senior MENA official, said in Dubai on Sunday.

"You cannot continue doing what you've been doing for years when you see what the reaction on the street is and when you see what the state of the economy is."

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