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)
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Updated 06 May 2020

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

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.


More than 20 injured by blast in Gaza home

Updated 23 January 2021

More than 20 injured by blast in Gaza home

  • The source of the accidental explosion was apparently the home of a member of one of Gaza’s armed groups
  • Witnesses said several homes were damaged as a result of the explosion in the home of an “activist”

GAZA CITY: More than 20 people were injured and several homes destroyed by a large explosion Saturday in a residential area of the Hamas-ruled Gaza Strip, Palestinian officials said.
The source of the accidental explosion was apparently the home of a member of one of Gaza’s armed groups.
“An explosion occurred in a house in Beit Hanoun this morning, resulting in a number of injuries,” the interior ministry said, adding that an investigation had been launched into the cause of the blast.
Medical sources said more than 20 people were injured, two of them seriously.
Witnesses said several homes were damaged as a result of the explosion in the home of an “activist.” Police cordoned off the area.
There was no immediate official explanation of the explosion, but the Israeli military said it was the result of militants “storing weapons in residential homes.”
Houses “have been turned into warehouses for weapons... and missiles for terrorist organizations, and those who pay the price in the end are innocent civilians,” the military’s Arabic-language spokesman, Avichay Adraee, said on Twitter.
Hamas seized control of Gaza from rival Palestinian movement Fatah in a near civil war in 2007.
Since then, Hamas has fought three devastating wars with Israel, which has maintained a crippling blockade on the territory of some two million people.