Lebanon’s Economic Crisis Deepens as Parliament Stalls on Crucial Legislation
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Hashim Sheikh
- . August 18, 2023
- . Update: August 18, 2023 7:17 pm
Najib Mikati, the caretaker prime minister of Lebanon, delivered a harsh appeal on Thursday, pleading with the parliament to act quickly on several crucial economic laws. As a result of the parliament’s failure to convene, frustration has risen since debates over the nation’s sovereign wealth fund and capital control laws have not occurred.
“In countries facing comparable economic crises, parliamentary sessions are held regularly, leading to timely resolutions,” remarked Mikati. However, despite four years of effort, Lebanon has made little headway on the capital control issue.
Concerns regarding Lebanon’s economic stability have been expressed due to the lack of legislative movement. Mikati emphasised the significance of many bills addressing the recovery plan, bank restructuring, and financial shortfalls. He warned that the nation’s economic unrest would grow unless the parliament worked together to enact these measures.
The risks of the ongoing crisis have increased due to Lebanon’s shift to a cash-based economy. Mikati emphasised the seriousness of the circumstance by stating that everyone must share responsibility for coming up with a solution.
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Legislative meetings have been boycotted by lawmakers, who have expressed concerns about the Sovereign Wealth Fund Bill’s possible flaws and bias. It was disclosed by MP Sajih Atiyeh, chair of the parliamentary work and energy committee, that the bill has not yet been discussed in committee.
According to MP Osama Saad, the proposed capital control law appears to put banks’ interests first. On the other hand, Salim Al-Sayegh, a member of parliament, underlined the necessity of a balanced discussion and emphasised the lack of a president to oversee the process.
In a dramatic turn of events, a group of depositors staged a protest outside the parliament’s grounds, stopping legislators from entering the building. Any efforts to adopt capital control legislation were met with their opposition.
Despite these difficulties, the caretaker government passed the budget for the current year; however, due to changes demanded by some ministers, the budget deficit increased from 18.5 to almost 24 per cent.
Meanwhile, a significant power outage forced Mikati to verbally agree with a major power supplier to earn $7 million monthly in exchange for starting up power plants. The action came after a 24-hour shutdown that power plant operator Primesouth started to get the government to pay off accrued debts.
In response to inquiries concerning the funding’s origins sparked by Mikati’s pledge, he cryptically stated that the “emerging crisis is being resolved.”
The effects of the electrical outage spread throughout Lebanon and impacted vital services. The vulnerability of the electricity infrastructure was exposed when Beirut’s port and international airport had to rely on private generators to keep running.
Private generators failed to supply enough power when water pumps stopped working due to the power outage. Primesouth attempted to obtain funding from the International Monetary Fund or Banque du Liban, the central bank of Lebanon, but these attempts were unsuccessful.
Wassim Mansouri, the interim governor of the Banque du Liban, underlined the necessity of legislative action and extensive reforms to ensure the government pays the central bank its dues. The situation has become more difficult due to the parliament’s participation in the approval of payments.
The urgent need for parliamentary action on crucial legislation continues to be a serious priority even as the nation struggles with economic instability and power outages. The success of Lebanon’s recovery depends on its capacity to overcome political and economic obstacles via coordinated efforts and firm action.
