Lebanon needs urgent aid and reforms, International Crisis Group says

‘Unprecedented’ economic crisis will require emergency assistance

TOPSHOT - Lebanese riot police stand guard in front of protesters during a demonstration in central Beirut, on June 6, 2020. Protesters poured into the streets of the Lebanese capital to decry the collapse of the economy, as clashes erupted between supporters and opponents of the Iran-backed Shiite group Hezbollah. / AFP / PATRICK BAZ
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Lebanon needs urgent international help and long-demanded reforms to protect its people from their country's worst economic crisis, the International Crisis Group said on Monday.

"The economic crisis is without precedent in the country's history," the Brussels think tank said.

Lebanon's economy has been in freefall since last year, sparking mass protests from October against an entrenched political class viewed as inept and corrupt.

The local currency has plunged in value, prices have soared, and tens of thousands have lost their jobs or had their salaries slashed, all compounded from mid-March by a coronavirus lockdown.

That month, the heavily debt-ridden country defaulted for the first time.

The government has since adopted an economic recovery plan and entered talks with the International Monetary Fund, seeking to unlock billions of dollars in aid.

"Lebanon needs to urgently push ahead with the negotiations with the IMF, on which support from other sources also depends," the ICG said.

The country is seeking about $9 billion (Dh33bn) from the IMF, the finance minister has said, on top of another $11bn in grants and loans pledged by international donors in 2018 but never released because they relied on Beirut introducing reforms.

Meanwhile, "external donors may need to step up humanitarian assistance to help those Lebanese hardest hit by the crisis", the ICG said.

More than 35 per cent of Lebanese are unemployed, while poverty has soared to more than 45 per cent of the population, official estimates show.

The ICG said external donors should also "focus on efforts geared at rooting out corruption and clientelism".

Future governments will have to implement significant reforms "to put the country's fiscal and economic system back on a sound footing", it said.

"Such structural change will have to put an end to the political model in which corrupt and self-serving cliques appropriate and redistribute state resources and public goods."

The think tank said it was "highly questionable" whether the political elite would be able to oversee such a transition, describing it as "pulling out the rug from under their own feet".

"It is very hard to imagine that they will do so unless the Lebanese who have gone into the streets since October 2019 find ways to exert sustained pressure on the country's political institutions," it said.