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Crisis Group warns Lebanon needs urgent aid as economic crunch worsens

More than 35 percent of Lebanese are unemployed (Getty)

Date of publication: 8 June, 2020

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Lebanon needs urgent international help and long-demanded reforms to shield its people from their country's worst ever economic crunch, the International Crisis Group said.

Lebanon needs urgent international help and long-demanded reforms to shield its people from their country's worst ever economic crunch, the International Crisis Group said Monday.

"Lebanon will need emergency external assistance to ward off the worst social consequences of the crisis," the Brussels-based think tank wrote in a new report.

"The economic crisis is without precedent in the country's history," the ICG said.

The Mediterranean country's economy has been in freefall since last year, partly sparking mass protests from October against an entrenched political class viewed as inept and corrupt.

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 The local currency has plunged in value, prices have soared, and tens of thousands have lost their jobs or seen their salaries slashed - all compounded from mid-March by a coronavirus lockdown.

The heavily indebted country defaulted for the first time in March.

The government has since adopted an economic recovery plan and entered talks with the International Monetary Fund, seeking to unlock billions of dollar in aid.

"Lebanon needs to urgently push ahead with the negotiations with the IMF, on which support from other sources also depends," the ICG warned.

The country is seeking around $9 billion from the IMF, the finance minister has said, on top of another $11 billion in grants and loans pledged by international donors in 2018 but never released due to a lack of reform.

Meanwhile, "external donors may need to step up humanitarian assistance to help those Lebanese hardest hit by the crisis," the ICG said.

More than 35 percent of Lebanese are unemployed, while poverty has soared to over 45 percent of the population, according to official estimates.

The ICG said external actors and donors should also "focus on efforts geared at rooting out corruption and clientelism".

Future governments will have to implement significant reforms "to put the country's fiscal and economic system back on a sound footing," it said.

"Such structural change will have to put an end to the political model in which corrupt and self-serving cliques appropriate and redistribute state resources and public goods."

The think tank said it was "highly questionable" whether the political elite would be able to oversee such a transition, describing it as tantamount to "pulling out the rug from under their own feet".

"It is very hard to imagine that they will do so unless the Lebanese who have gone into the streets since October 2019 find ways to exert sustained pressure on the country's political institutions," it said.

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