Lebanon's caretaker Finance Minister, Youssef Khalil, has cautioned that the impact of the recently announced financial package of €1 billion ($1.07 billion) to the cash-strapped country could be undermined by corruption unless accompanied by reforms.
“This is a risk,” Mr Khalil said. “The modalities to prevent this will be discussed in the coming weeks.”
Five years into an economic crisis labelled by the World Bank as one of the worst since 1850, vested interests in Lebanon's ruling elite have been accused of obstructing the much-needed financial reforms necessary to secure the country's access to a $3 billion aid package from the International Monetary Fund (IMF).
Despite pressure to make aid conditional on reforms, the European Union nonetheless this week pledged a financial package of €1 billion euros to prop up Lebanon's faltering economy.
In an interview with The National, Mr Khalil said that only substantial reforms could lift the country out of its deep crisis, despite a slowing economic contraction since 2022.
“We've succeeded in boosting state revenues this year, but this will only provide a respite of two or three years unless structural reforms are implemented,” he said.
These much-needed reforms have been prevented by “the economic and political structure of the country”, he said.
After a severe financial crisis shook the country in 2019, Lebanon reached what the World Bank described as a “temporary bottom” in 2022, allowing the volatile exchange rate to temporarily stabilise, due to tourism and significant remittances from the Lebanese diaspora.
However, the spillover of the Gaza war into Lebanon has curbed initial predictions of growth for the country's economy, which had been projected to expand in 2023 for the first time since 2018, by 0.2 per cent.
Finding a way out
Mr Khalil said one of the main reforms that helped bolster state revenues was the increase in the exchange rate used to calculate customs duties on imports. This, he said, enabled the government to increase public service workers' salaries.
The 2024 budget proposal put forward significant tax and VAT increases, but was criticised by some observers for its lack of long-term vision.
“We cannot live like this on customs revenues eternally,” Mr Khalil admitted.
International donors have demanded structural reforms of Lebanon's public sector, with a focus on revamping the dilapidated electricity sector and its public utility, Electricite du Liban (EDL).
These reforms have yet to be initiated.
Nonetheless, Mr Khalil said he remains optimistic about Lebanon's ability to emerge from the crisis.
He see hope in tourism revenues and the potential for investments through public-private partnerships, which allow large-scale government projects to be completed with private funding, thereby alleviating pressure on public finances.
“Confidence is key and can be restored,” he said.
Many experts believe that restoring confidence hinges on the adoption of an economic recovery plan, one of the prerequisites outlined by the IMF, which Lebanon's elite has displayed minimal interest in implementing.
Three different plans have already been jeopardised because of the lack of consensus on how to allocate Lebanon's massive financial losses.
The IMF, with whom Lebanon signed a staff-level agreement yet to be implemented, has consistently criticised, in unusually strong terms, the country's elite for its inaction.
“The IMF plan is there to be proposed but not imposed,” Mr Khalil said, claiming the plan's failure came from a lack of flexibility on how to adopt the required reforms within the Lebanese context.
He added that the broader political context is key to Lebanon' economic recovery.
South Lebanon, which is being pounded on a daily basis by the Israeli army amid the continuing border conflict, has endured “significant destruction”. No estimates have yet been made of how much it could cost Lebanon to rebuild.
“Who will foot the bill, what the cost will be, poses a significant challenge,” Mr Khalil said.
Crisis responsibility
Lebanon's 2019 economic crisis, which came after decades of public funds being squandered, plunged more than 80 per cent of the population into poverty, destroyed the value of the local currency and pushed the banking sector to insolvency.
The government estimates that about $70 billion was lost, with many ordinary Lebanese citizens losing their entire savings which were stuck in banks.
Lebanon's former central bank governor, Riad Salameh, long lauded as the “financial wizard” who kept the banking sector flourishing, is now wanted by the European judiciary on accusations of corruption and is widely viewed as the culprit for the economic collapse.
Mr Khalil, who joined the central bank in 1982 as an economist, has consistently denied any knowledge of wrongdoing during his tenure.
As the director of the financial operations department at BDL (Banque du Liban), from 1994 until he became a government minister in 2021, he oversaw the financial engineering strategy implemented from 2016, in which the dollar-starved BDL offered lavish interest rates to banks in exchange for their dollars.
This policy resulted in massive losses at the central bank, which were not publicly disclosed at the time. It has since been blamed as one of the causes of the economic crisis.
Its critics have labelled it a “Ponzi scheme”, where fresh borrowing is used to pay back debt.
In hindsight, Mr Khalil acknowledged the excesses of this policy.
“It was originally designed to buy time until we could establish more robust monetary and economic strategies, but everyone got carried away and overdid it.”
Banks have been the target of protests across Lebanon since 2019, with depositors angry that they have been unable to access their savings.
BDL and some other banks in Lebanon have tried to deflect responsibility for the losses from the period on to public policies, claiming that the financial sector had lent money to the government, which they accuse of misusing funds.
In early 2023, Lebanon's central bank said it had been owed $16.6 billion from the state since 2007.
But Mr Khalil insisted that there is a shared responsibility in the crisis. “BDL was part of all political and economic decision-making.”
“The state, the central bank and the banks – all have made mistakes.”
Qosty Byogaani
Starring: Hani Razmzi, Maya Nasir and Hassan Hosny
Four stars
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
Profile of RentSher
Started: October 2015 in India, November 2016 in UAE
Founders: Harsh Dhand; Vaibhav and Purvashi Doshi
Based: Bangalore, India and Dubai, UAE
Sector: Online rental marketplace
Size: 40 employees
Investment: $2 million
North Pole stats
Distance covered: 160km
Temperature: -40°C
Weight of equipment: 45kg
Altitude (metres above sea level): 0
Terrain: Ice rock
South Pole stats
Distance covered: 130km
Temperature: -50°C
Weight of equipment: 50kg
Altitude (metres above sea level): 3,300
Terrain: Flat ice
The specs
Engine: 2.0-litre 4-cyl, 48V hybrid
Transmission: eight-speed automatic
Power: 325bhp
Torque: 450Nm
Price: Dh289,000
Company profile
Company name: Dharma
Date started: 2018
Founders: Charaf El Mansouri, Nisma Benani, Leah Howe
Based: Abu Dhabi
Sector: TravelTech
Funding stage: Pre-series A
Investors: Convivialite Ventures, BY Partners, Shorooq Partners, L& Ventures, Flat6Labs
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
Paatal Lok season two
Directors: Avinash Arun, Prosit Roy
Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong
Rating: 4.5/5
Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
DIVINE%20INTERVENTOIN
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Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
Personalities on the Plate: The Lives and Minds of Animals We Eat
Barbara J King, University of Chicago Press
Company%20profile
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The%C2%A0specs%20
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Infiniti QX80 specs
Engine: twin-turbocharged 3.5-liter V6
Power: 450hp
Torque: 700Nm
Price: From Dh450,000, Autograph model from Dh510,000
Available: Now
How it works
A $10 hand-powered LED light and battery bank
Device is operated by hand cranking it at any time during the day or night
The charge is stored inside a battery
The ratio is that for every minute you crank, it provides 10 minutes light on the brightest mode
A full hand wound charge is of 16.5minutes
This gives 1.1 hours of light on high mode or 2.5 hours of light on low mode
When more light is needed, it can be recharged by winding again
The larger version costs between $18-20 and generates more than 15 hours of light with a 45-minute charge
No limit on how many times you can charge
Wonka
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The Buckingham Murders
Starring: Kareena Kapoor Khan, Ash Tandon, Prabhleen Sandhu
Director: Hansal Mehta
Rating: 4 / 5
Results
2pm: Al Sahel Contracting Company – Maiden (PA) Dh50,000 (Dirt) 1,200m; Winner: AF Mutakafel, Tadhg O’Shea (jockey), Ernst Oertel (trainer)
2.30pm: Dubai Real Estate Centre – Maiden (TB) Dh60,000 (D) 1,200m; Winner: El Baareq, Antonio Fresu, Rashed Bouresly
3pm: Shadwell – Rated Conditions (TB) Dh100,000 (D) 1,950m; Winner: Lost Eden, Andrea Atzeni, Doug Watson
3.30pm: Keeneland – Handicap (TB) Dh84,000 (D) 1,000m; Winner: Alkaraama, Dane O’Neill, Musabah Al Muhairi
4pm: Keeneland – Handicap (TB) Dh76,000 (D) 1,800m; Winner: Lady Snazz, Saif Al Balushi, Bhupat Seemar
4.30pm: Hive – Conditions (TB) Dh100,000 (D) 1,600m; Winner: Down On Da Bayou, Royston Ffrench, Salem bin Ghadayer
5pm: Dubai Real Estate Centre – (TB) Handicap Dh64,000 (D) 1,600m; Winner: Lahmoom, Royston Ffrench, Salem bin Ghadayer
WOMAN AND CHILD
Director: Saeed Roustaee
Starring: Parinaz Izadyar, Payman Maadi
Rating: 4/5
The specs: Lamborghini Aventador SVJ
Price, base: Dh1,731,672
Engine: 6.5-litre V12
Gearbox: Seven-speed automatic
Power: 770hp @ 8,500rpm
Torque: 720Nm @ 6,750rpm
Fuel economy: 19.6L / 100km
Ferrari
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INDIA'S%20TOP%20INFLUENCERS
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Killing of Qassem Suleimani
ELIO
Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett
Directors: Madeline Sharafian, Domee Shi, Adrian Molina
Rating: 4/5
Normcore explained
Something of a fashion anomaly, normcore is essentially a celebration of the unremarkable. The term was first popularised by an article in New York magazine in 2014 and has been dubbed “ugly”, “bland’ and "anti-style" by fashion writers. It’s hallmarks are comfort, a lack of pretentiousness and neutrality – it is a trend for those who would rather not stand out from the crowd. For the most part, the style is unisex, favouring loose silhouettes, thrift-shop threads, baseball caps and boyish trainers. It is important to note that normcore is not synonymous with cheapness or low quality; there are high-fashion brands, including Parisian label Vetements, that specialise in this style. Embraced by fashion-forward street-style stars around the globe, it’s uptake in the UAE has been relatively slow.
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
MATCH INFO
Norwich City 1 (Cantwell 75') Manchester United 2 (Aghalo 51' 118') After extra time.
Man of the match Harry Maguire (Manchester United)
