January 22, 2020 / 1:18 PM / a month ago

IMF seen as option for Lebanon depending on terms: senior politician

BEIRUT (Reuters) - An International Monetary Fund program is an option for Lebanon depending on terms that should be bearable for the crisis-hit country and not trigger social unrest, a senior politician said on Wednesday as a new government took office.

FILE PHOTO: The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, U.S., September 4, 2018. REUTERS/Yuri Gripas

The question of whether Lebanon should engage the IMF is seen as one of the most pressing decisions facing the cabinet, which must urgently draw up a rescue plan to address a financial and economic emergency as protests turn violent.

After months without effective government, Lebanon finally formed a government on Tuesday with backing from the powerful Shi’ite Muslim group Hezbollah and allies, including the Free Patriotic Movement (FPM) founded by President Michel Aoun.

New Prime Minister Hassan Diab’s cabinet is made up of technocratic figures selected by groups including Hezbollah, the FPM and Parliament Speaker Nabih Berri’s Amal Movement.

The FPM nominated six of the 20 ministers.

“The top priority is to put in place a rescue program for financing Lebanon’s needs and one of the options is an IMF program,” Alain Aoun, a senior FPM politician, told Reuters.

“But we have to understand first what are the requirements and to see if they are bearable or acceptable to us as Lebanese, because we don’t want to have a social problem in addition to the financial crisis.

“We have to be careful not to trigger social unrest,” he added. “But we definitely need international assistance to finance our spending needs in the public and private sector.”

The absence of a government had left Lebanon rudderless with ordinary people suffering in a crisis whose root causes include decades of state corruption and bad governance that have landed Lebanon with one of the world’s heaviest public debt burdens.

A liquidity crunch has led banks to restrict access to cash and caused the Lebanese pound to slump. Jobs have been lost and inflation has soared. Over the last week, hundreds have been injured in clashes between security forces and demonstrators.

New Finance Minister Ghazi Wazni said on Tuesday Lebanon needed foreign aid to save it from an unprecedented situation that had forced people to “beg for dollars” at the banks and fear for their deposits.

Reporting by Tom Perry; Editing by Mark Heinrich

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