Beirut: The new Lebanese government, finally formed in the uphelement of economic destruction that accelerated after 13 months of political deadlock, had his work cut.
What is the most urgent problem for the cabinet announced on Friday, and how easy they are to overcome? The Cabinet Prime Minister 24 members Najib Mikati really needs to lift Lebanon from what the World Bank has called one of the worst economic crises of the planet since the 1850s.
The Lebanese pound has lost more than 90 percent of its value against the dollar in the black market, inflation has soared and people’s savings are trapped in the bank.
With foreign currency reserves, countries that lack money have struggled to maintain subsidies in basic items.
Gasoline and medicine have become rare, the state barely provides two hours of electricity supply a day, and almost 80 percent of the population now lives in poverty.
“The first priority for the government will truly stem the collapse,” said Maha Yahya, Director of the Carnegie Middle East Center.
Subsidies need to be appointed and the safety net is put in place to make it easier for the punch to the most vulnerable, he said.
To do this, analysts said the cabinet needed to launch talks with international monetary funds to open billions of dollars in financial assistance.
After default on its debt in March 2020 for the first time in history, Lebanon began talking to the IMF, but this quickly crashed into the wall in the middle of the upper fight that must bear the burden of loss.
The international community requires sweeping reform and forensic audit of the central bank of the state before each financial assistance is disbursed.
The previous government in 2020 announced a rescue road map which included the reform of the electricity sector, restructuring the banking sector and lifting the official dollar.
But it has not been implemented.
The audit of the central bank, it also stopped, with the central bank claiming it could not provide an audit company with several documents needed due to banking secrecy.
Economist Mike Azar said that reforming the large commercial banking sector and the central bank, and restructuring the public sector, would be the key to the IMF agreement.
“There is nothing you can do the shortcomings of these two big restructuring,” he told AFP.
But the traditional ruling class that has dominated politics in Lebanon since the 1975-1990 war tends to be reluctant.
“The restructuring of the public sector has an impact on political parties, because this is the main source of financing for” their protection system, he said.
“How did they accept it?” Although some of the 24 new ministers in the Cabinet Mikati are technocrats, all have been supported by at least one of the many political parties competing Lebanon.
Yahya said that developing a medium-term rescue plan to the country will be a “big challenge” because the new government has no political consensus.
“This government is formed with a business mentality – as usual so that everyone there represents one political leadership or another,” he said.
This means political parties “can use ministers within the government to block whatever reform they see as damaging their interest or unpopular on the road”.
Mikati on Friday vowed to hold parliamentary elections in May 2022 on time.
In the country shaken in 2019 with protests called for the overhaul of the entire political class, several activists saw this as an opportunity to issue an old guard who was considered incompetent and corrupt, and brought younger experts to represent the best interests of the people.
But Michel Douihy analyst said political parties in power since the end of the civil war were ready to do anything to hold fast to power.
The traditional verdict class is “trying through this government to attract breath” and restore the future credibility of the next parliamentary election, he told AFP.
He said their tactics could even include polls delays.