What Reforms Did Lebanon’s Government Approve to Ease Protests?

(Bloomberg) -- Lebanon’s government approved a package of emergency measures Monday, including structural and fiscal reforms that were delayed for years by political infighting, as officials sought to avoid a financial meltdown and quell five days of protests demanding they resign.

This is a breakdown of the key steps:

• Approve 2020 budget with deficit target equivalent to 0.63% of GDP by Oct. 25, 2019 and the following measures:
  • Subsidize losses of state electricity company by no more than $1 billion, half the $2 billion sum it normally receives a year
  • The central bank will slash by 50% the servicing costs for Lebanese pound-denominated government debt that it holds
  • Pay all expenditures above 100 million pounds ($66,000) in installments over three years
  • Reduce salaries of current and former ministers and parliamentarians by 50%
  • Impose a one-time income tax on banks for 2020
  • No other taxes, levies
  • Scrap plan to tax pensions for retired civil servants, military personnel
  • Limit border smuggling
• Reduce by 70% the budget for the Council for Development and Reconstruction, Council of the South and another state fund.
• Improve transparency and fight corruption by approving a series of measures by year-end including:
  • A law to restore plundered state funds
  • A national strategy to fight corruption
  • A law to protect corruption whistle blowers
  • A law that would make all public entities accountable to courts
  • Ensure all government purchases comply with procurement law
• Freeze unnecessary investment spending in several sectors including telecommunications
• Approve $13.3 million of additional financing for a program that supports poor families
• Provide low cost housing loans
• Secure electricity around the clock by mid-2020, slash electricity sector losses by 2021
  • Hasten launch of tenders to build temporary and permanent power plants
  • Approve tender book for power plant bids, launch tender by year-end, sign contracts by February of next year
  • Finalize bids offered to build Floating Storage Regasification Units
• Approve by mid-2020 all measures proposed by international donors at the CEDRE meeting in Paris in 2018, including a progressive income tax and competition law
• Approve law to resolve disputes over illegal construction along the coast
• Execute all measures set out in McKinsey & Co.’s Lebanon Economic Vision
• Transfer surpluses from all ministries and state enterprises to the Treasury
• Merge ministries, abolish the information ministry and review other public entities
• Consider selling a stake in the country’s two mobile networks, which are both government-owned
• Finalize by year-end plans to privatize other state enterprises including Middle East Airlines, Casino du Liban, Beirut Port and the Beirut stock exchange
• Review how state properties are used and look at ways to utilize them better
• Implement investment projects previously approved by the government and valued at $2.7 billion

To contact the reporter on this story: Dana Khraiche in Beirut at dkhraiche@bloomberg.net

To contact the editors responsible for this story: Lin Noueihed at lnoueihed@bloomberg.net, Paul Abelsky

©2019 Bloomberg L.P.