Lebanese Cabinet agrees to reforms and 2020 budget in bid to appease protesters

Lebanese ministers agreed to all points of the prime minister’s economic reforms package and the 2020 draft state budget on Monday, amid five days of protests.

Prime Minister Saad Hariri took his proposal to Cabinet at Baabda Palace on Monday to try to salvage the country's ailing economy and ease anger after four days of mass nationwide rallies.

President Michel Aoun also addressed five days of protests, saying the people were expressing their pain on the streets.

Mr Hariri's 18-point proposal includes halving salaries for current and former officials, privatising telecommunications and acting to provide 24-hour electricity.

Bur protesters continued to rally in Beirut and other parts of the country on Monday evening, with those gathered at Martyrs' Square continuing to call for a new government to be installed.

After the Cabinet session, Mr Hariri said the 2020 budget would have a 0.6 per cent deficit, paid for in part by a new tax on bank profits.

He said the Information Ministry and other government bodies would be axed and licensing for power plants sped up.

Mr Hariri said his proposal included a draft law to return money looted from the state.

I will not let anyone threaten or scare you away

Saad Hariri

“Your demonstrations led to these reforms being approved,” he said as he backed calls for an early election.

“I turn to the youth to tell them that what we have done today is a first step in the process of achieving your ambitions, which are our ambitions, and this happened thanks to you because you broke all the barriers.

“If protesters want early parliamentary elections, I will support it. The protests across the country restored Lebanon's national identity and broke sectarian barriers.

“I will not let anyone threaten or scare you away. You decide when to stop demonstrating, not me.”

The protesters gathered in Beirut on Monday appeared to be in no mood to stop.

A woman in her twenties said she was not convinced by Mr Hariri's words, calling them "old promises".

Like many of the protesters she called for a government of technocrats that could return "stolen money", or wealth accumulated through political corruption.

As in the previous two days, the atmosphere at the protests was festive, with music blaring, people selling shirts with the Lebanese flag and others with the flag painted on their cheeks.

Former labour minister Camille Abou Sleiman who resigned over the weekend along with three other ministers from the Lebanese Forces party, told The National that he was awed by the demonstrations and proud of them.

He said Mr Hariri's measures were "too little, too late", and that he planned to join the protests.

Two young men at the protest, Raji Tarabey, 25 and Hussein, 24, had different solutions for the state's problems.

"They have been in power for 30 years," Husswein said. "When we took to the streets they asked for a three-day delay and now they are promising things.

"We do not believe them. We want a military coup and to get our money back from politicians who should be tried. And then put non-sectarian politicians in power."

Mr Tarabey was more cautious: "I'm not sure a military coup is the best idea.

"We want a transition to a technocratic government and for the stolen money to be returned. We want everyone in power now to resign and we are not satisfied with what Hariri said."

“Hariri’s economic blueprint does not contain any new taxes or fees on citizens," a source told Lebanon’s The Daily Star before the Cabinet session.

"It calls for measures to fight corruption and waste of public funds and providing 24-hour electricity in 2020.”

In his opening remarks in the Cabinet meeting on Monday, Mr Aoun made his first comments since protests erupted last Thursday.

“What is happening on the streets reflects the pain of the people,” he said.

But Mr Aoun said that accusing everyone of corruption was a great injustice. He called on ministers to adopt a bill to lift banking secrecy from the accounts of current and former ministers.

The proposal to build trust and accountability is to make ministers’ accounts a matter of public record, so that accusations of corruption can be investigated by the public.

The state-run National News Agency said ministers from the Lebanese Forces party did not attend Monday’s session after leader Samir Geagea announced on Saturday that they would step down from their posts.

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Lebanese flashpoints

Protest sites and roadblocks mapped

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Mr Hariri spent the weekend negotiating with partners in his coalition government to support his plan after he announced on Friday a 72-hour deadline for them to do so, hinting that he would otherwise resign, collapsing the government.

He has accused his rivals of blocking his reforms that could unlock $11 billion (Dh40.4bn) in western donor pledges and help to avert economic collapse.

Mr Hariri's proposal would also cut benefits to state institutions and officials, and obliges the central bank and private banks to contribute $3.3bn to achieve a "near-zero deficit" for the 2020 budget.

Officials said the budget would not include additional taxes or fees after a decision last week to put a levy on WhatsApp calls sparked the unrest.

The reforms also call for new regulatory and transparency agencies to oversee reforms.

Electricity prices do not cover the cost of generation but officials have for years been reluctant to raise costs when there are daily power cuts of at least three hours, and often up to 12.

This leads to a $1bn shortfall in the state electricity provider every year that the government has to cover it.

Lebanese government bonds tumbled as markets opened on Monday in response to the protests.

The sovereign's 2025 issue tumbled 1.34 cents to the dollar to trade at 65.5 cents, Tradeweb data showed, taking the bond's two-day losses to nearly 4 cents.

The UN special co-ordinator for Lebanon, Jan Kubis, on Monday tweeted that he had spoken to Parliamentary Speaker Nabih Berri of the “importance of listening to millions of protesting Lebanese and their legitimate demands for just and radical reforms".

Mr Kubis also called on the security forces and army to continue protecting the peaceful demonstrations against “political instigators of violence".

He specifically mentioned recent events in Tyre, a south Lebanese city where the speaker has large support.

There were violent confrontations between protesters who were attacked and intimidated by armed men, who the demonstrators say identified themselves as supporters of Mr Berri’s Amal movement.

On Sunday night, the fourth evening of protests appeared to be the largest so far with local newspapers claiming many more than a million took to the streets nationwide.

The numbers could not be confirmed and the government does not provide official estimates.

In contrast to the first two days of rallies, where police used water cannon and batons to disperse protesters, the third and fourth days were festive, with throngs of people chanting, singing and waving flags.

The crowds, especially earlier in the evenings, were a mix of youths, families and older people.

People danced and sang, with some forming human chains as they chanted for their leaders to be ousted.

"I am here because I am disgusted by our politicians," said Cherine Shawa, 32, an interior architect, in Beirut.

"Nothing works. This is not a state. Salaries are very low, prices are very high. We don't even have work these days."

Ending corruption was a central demand of the protesters, who say the country's leaders have enriched themselves for decades through favourable deals and kickbacks.

"We're here to say to our leaders, 'Leave'," said Hanan Takkouche, a woman in her 40s, in Beirut.

"We have no hope in them but we're hopeful that these protests will bring change. They came to fill their pockets. They're all crooks and thieves."

Many blamed the ruling elite for driving their children out of Lebanon because they failed to build a country that could provide jobs.

Army troops and security forces were posted across the country and blocked roads leading to the presidential palace.

Protesters on the main Jounieh motorway leading north from Beirut issued a warning that they would only let military vehicles or emergency services through the roadblocks.

The motorway is a major route for Beirut commuters and closing it effectively stopped many reaching work.

The Lebanese army on Sunday evening said it supported the protesters' rights to demonstrate and their demands.

But it called on them not to damage public and private property after windows were smashed and hoardings around construction sites were pulled off to feed street fires.

“The army leadership calls on all protesting citizens and those claiming their rights to livelihoods and dignity to express peacefully and not to allow infringements on public and private property,” it said.

“It stresses its full solidarity with their rightful demands but calls on them to work with security forces to facilitate the affairs of citizens.”

Universities closed their doors on Monday, with the American University of Beirut saying all exams this week would be postponed at least a week after classes resumed.

Banks said they would remain closed on Monday and the main labour union announced a general strike, threatening further paralysis.

The UAE Minister of State for Foreign Affairs, Dr Anwar Gargash, on Monday tweeted that rallies taking place in several Arab countries were calla for the return of strong, just and national states.

“It is a cry against sectarianism and against partisan affiliations that cling to religion. It is a request to return to the national identity,” Dr Gargash said.

This year, mass protests in Algeria led to President Abdelaziz Bouteflika standing down. Oman Al Bashir in Sudan stepped aside after months of demonstrations, and in Iraq more than 100 were killed in rallies that led to a Cabinet reshuffle.

In Lebanon, without a boost to foreign funds, officials and economists predict a currency devaluation or a debt default within months.

The International Monetary Fund said last week that Lebanon's crisis required tough austerity measures such as tax rises and levies on fuel – steps the country's politicians have publicly vowed not to take.

Lebanon's economy registered just 0.3 per cent growth last year. The IMF said the reforms were needed to stem a ballooning deficit and public debt that it forecast to reach 155 per cent of GDP by year-end.

— Additional reporting by agencies