Lebanon plan based on flexible exchange rate in ‘coming period’- Finance Minister
Lebanon plan based on flexible exchange rate in ‘coming period’- Finance Minister/node/1670536/middle-east
Lebanon plan based on flexible exchange rate in ‘coming period’- Finance Minister
Lebanon's Finance Minister Ghazi Wazni talks during a meeting with Lebanese political leaders to present the plan aimed at steering the country out of a financial crisis, at the presidential palace in Baabda, Lebanon May 6, 2020. (Reuters)
Lebanon plan based on flexible exchange rate in ‘coming period’- Finance Minister
"We are forced in the current phase to continue in the policy of fixing (the rate)," the minister said
The Lebanese pound has lost more than half of its value since October
Updated 06 May 2020
Reuters
BEIRUT: A government plan for getting Lebanon out of a financial crisis is based on a shift to a flexible exchange rate, but in the “coming period,” and a currency peg will be maintained for now, Finance Minister Ghazi Wazni said on Wednesday.
The government approved the plan, which entails vast losses in the financial system, last week, announcing it would form the basis of aid negotiations with the International Monetary Fund.
The crisis is seen as the greatest risk to Lebanon’s stability since its 1975-90 civil war.
Prime Minister Hassan Diab said the plan was not sacred and could evolve, urging Lebanese to set aside differences during a meeting with some of the country’s fractious politicians.
The Lebanese pound has lost more than half of its value since October and depositors have largely been shut out of their savings as dollars have become ever more scarce. Inflation, unemployment and poverty have soared.
The pound has been pegged at 1,507.5 to the dollar since 1997 and the central bank supplies dollars at this price for the purchase of fuel, medicine and wheat. Dollars were changing hands at over 4,000 pounds on the parallel market on Wednesday.
The plan is based on “a policy of a flexible exchange rate in the coming period, in a gradual and studied way,” Finance Minister Ghazi Wazni told the meeting.
He gave no time frame for the change but said freeing up the exchange rate before restoring confidence and securing international support would lead to a big deterioration in the value of the pound and uncontrolled price rises of basic goods.
DEBT DEFAULT
"We are forced in the current phase to continue in the policy of fixing (the rate)," he said.
The Diab government took office in January with backing from the powerful, Iran-backed Shiite group Hezbollah and allies including President Michel Aoun, the Christian Maronite head of state.
Speaking after the meeting, Samir Geagea, a Maronite rival to Aoun and Hezbollah opponent, said he would not support this or any other plan that did not start with serious steps to fight corruption and waste, including customs evasion.
These are widely seen as prime causes of the crisis, landing Lebanon with one of the world’s biggest public debt burdens. Lebanon defaulted on its sovereign debt in March.
Neither leading Sunni politician Saad Al-Hariri, a former prime minister and traditional ally of Gulf Arab and Western states, nor Druze leader Walid attended the meeting.
“Time is very precious. The accumulated losses are very big. The situation is very painful, and the chance to rectify (it) will not last long,” Diab said.
Wazni said Lebanon had started negotiations to restructure its sovereign debt two weeks ago. Benefits of going to the IMF included securing financial support of $9-$10 billion, he said.
Critics of the plan include Lebanon’s commercial banks. The plan foresees them sustaining losses of some $83.2 billion.
The banking association is working on its own plan that aims to preserve some of its capital rather than writing it off as set out in the government proposals.
UN Security Council members blast Israel’s West Bank plans on eve of Trump’s Board of Peace meeting
Updated 4 sec ago
AP
UNITED NATIONS: Members of the United Nations Security Council called Wednesday for the Gaza ceasefire deal to become permanent and blasted Israeli efforts to expand control in the West Bank as a threat to prospects of a two-state solution, coming on the eve of President Donald Trump’s first Board of Peace gathering to discuss the future of the Palestinian territories. The high-level UN session in New York was originally scheduled for Thursday but was moved up after Trump announced the board’s meeting for the same day and it became clear that it would complicate travel plans for diplomats planning to attend both. It is a sign of the potential for overlapping and conflicting agendas between the United Nations’ most powerful body and Trump’s new initiative, whose broader ambitions to broker global conflicts have raised concerns in some countries that it may attempt to rival the UN Security Council. Pakistan, the only country on the 15-member council that also accepted an invitation to join the Board of Peace, denounced Israel’s contentious West Bank settlement project during the meeting as “null and void” and said it constitutes a “clear violation of international law.” “Israel’s recent illegal decisions to expand its control over the West Bank are gravely disturbing,” Pakistani Foreign Minister Ishaq Dar said. The foreign ministers of the United Kingdom, Israel, Jordan, Egypt and Indonesia also attended the Security Council’s monthly Mideast meeting after many Arab and Islamic countries requested last week that it discuss Gaza and the West Bank before some of them head to Washington. “Annexation is a breach of the UN Charter and of the most fundamental rules of international law,” Palestinian UN Ambassador Riyad Mansour said. “It is a breach of President Trump’s plan, and constitutes an existential threat to ongoing peace efforts.” Israeli Foreign Minister Gideon Saar said that attention was not on the UN session and that the focus of the international world would be on the Board of Peace meeting. Saar also accused the council of being “infected with an anti-Israeli obsession” and insisted that no nation has a stronger right than its “historical and documented right to the land of the Bible.” Bigger ambitions for the Board of Peace The board to be chaired by Trump was originally envisioned as a small group of world leaders overseeing his 20-point plan for Gaza’s future. But the Republican president’s new vision for the board to be a mediator of worldwide conflicts has led to skepticism from major allies. While more than 20 countries have so far accepted an invitation to join the board, close US partners, including France, Germany and others, have opted not to join yet and renewed support for the UN, which also is in the throes of major reforms and funding cuts. British Foreign Secretary Yvette Cooper said there is an opportunity for the UN’s most powerful body to help build “a better future” for Israelis and Palestinians despite the “cycle of violence and suffering” over the more than two-year war between Israel and Hamas. “Gaza must not get stuck in a no man’s land between peace and war,” Cooper said as she opened the meeting. Mike Waltz, the US ambassador to the UN, appeared to criticize countries that had not yet signed on to the Board of Peace, saying that unlike the Security Council, the board is “not talking, it is doing.” “We are hearing the chattering class criticizing the structure of the board, that it’s unconventional, that it’s unprecedented,” Waltz said Wednesday. “Again, the old ways were not working.” The Security Council is meeting a day after nearly all of its 15 members — minus the United States — and dozens of other diplomats joined Palestinian ambassador Mansour as he read a statement on behalf of 80 countries and several organizations condemning Israel’s latest actions in the West Bank, demanding an immediate reversal and underlining “strong opposition to any form of annexation.” In the last several weeks, Israel has launched a contentious land regulation process that will deepen its control in the occupied West Bank. Israeli Energy Minister Eli Cohen said it amounts to “de facto sovereignty” that will block the establishment of a Palestinian state. Outraged Palestinians, Arab countries and human rights groups have called the moves an illegal annexation of the territory, home to roughly 3.4 million Palestinians who seek it for a future state. ‘A pivotal moment in the Middle East’ The UN meeting also delved into the US-brokered ceasefire deal that took effect Oct. 10. UN political chief Rosemary DiCarlo and Israeli and Palestinian civil society representatives gave briefings for the first time since the Hamas-led Oct. 7, 2023, attacks that launched the war. Hiba Qasas, a Palestinian who is founding executive director of Geneva-based Principles for Peace Foundation, and Nadav Tamir, a former Israeli diplomat who is executive director of J Street Israel, both said they represent a strong coalition of Israelis and Palestinians who believe the only way to end the conflict is through a two-state solution. “Israel cannot remain the democratic homeland of the Jewish people if Palestinians are denied a homeland of their own. Our futures are interdependent,” Tamir said. DiCarlo of the UN said this is “a pivotal moment in the Middle East” that opens the possibility for the region to move in a new direction. “But that opening is neither assured nor indefinite,” she said, and whether it will be sustained depends on decisions in the coming weeks. “The Board of Peace meeting in Washington, D.C., tomorrow is an important step,” she said. Aspects of the ceasefire deal have moved forward, including Hamas releasing all the hostages it was holding and increased amounts of humanitarian aid getting into Gaza, though the UN says the level is insufficient. A new technocratic committee has been appointed to administer Gaza’s daily affairs. But the most challenging steps lie ahead, including the deployment of an international security force, disarming Hamas and rebuilding Gaza. Trump said this week that the Board of Peace members have pledged $5 billion toward Gaza reconstruction and will commit thousands of personnel to international stabilization and police forces for the territory. He didn’t provide details. Indonesia’s military says up to 8,000 of its troops are expected to be ready by the end of June for a potential deployment to Gaza as part of a humanitarian and peace mission.