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Facing protests, Lebanon approves emergency economic reforms

Facing protests, Lebanon approves emergency economic reforms
A demonstrator wearing a mask takes part in an anti-government protest in the southern city of Nabatiyeh, Lebanon October 21, 2019. REUTERS/Aziz Taher -
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AZIZ TAHER(Reuters)
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By Ellen Francis and Tom Perry

BEIRUT (Reuters) – Lebanon approved an emergency package of economic reforms on Monday, in response to a wave of anti-government protests that Prime Minister Saad al-Hariri praised for breaking down sectarian barriers and restoring a sense of national unity.

Across the country, people blocked roads for a fifth day. Schools, banks and businesses closed. Hundreds of thousands of people have flooded the streets, furious at a political class they accuse of pushing the economy to the point of collapse.

The protests have been extraordinary because of their size and geographic reach in a country where political movements are normally divided on sectarian lines and struggle to draw nationwide appeal.

Lebanon has one of the world’s highest levels of government debt as a share of economic output. The government includes most major parties under a power-sharing system that many Lebanese say has entrenched corruption and made it impossible to halt waste.

Protests continued after the measures unveiled by Hariri in a televised speech from the presidential palace.

The reforms included the symbolic step of halving the salaries of government ministers and lawmakers, as well as moves towards implementing long-delayed changes seen as vital to putting Lebanon’s public finances on a sustainable path.

Hariri said the government would approve within three weeks the first phase of a capital investment programme that donors have pledged to finance with $11 billion conditional on Lebanon implementing reforms.

“We have today taken steps to fight corruption, fight waste, we have made big projects,” Hariri said, adding that the moves were not designed to get people out of the street and the government must work to win back the confidence of the people.

Maya Mhana, a teacher listening to the speech in central Beirut with other protesters, was not convinced. “We are remaining in the streets, we don’t believe a single word he said,” she said.

“Lies, lies, lies,” said another protester who declined to give his name. “They have been governing for a long time. If they had wanted, they could have done anything.”

The government approved a 2020 budget with no new taxes and a deficit of around 0.6% compared to the targeted level of around 7% for 2019, Hariri said.

Cost-cutting steps included abolishing the ministry of information and other public institutions immediately and merging other unnecessary ones to save money.

The government also approved the establishment before the end of the year of a committee to fight corruption.

Lebanon’s large banking sector would contribute 5.1 trillion Lebanese pounds ($3.4 billion) to deficit reduction, including through an increase in the tax on bank profits, Hariri said.

The government would also accelerate the long-delayed reform of the state-run power sector, which drains $2 billion from the treasury every year while failing to deliver enough power for Lebanese who depend on private generators to fill the gap.

(Reporting by Ellen Francis and Tom Perry with additional reporting by Reuters TV in Beirut and Karin Strohecker in London; Editing by Mark Heinrich and Peter Graff)

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