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FINANCIAL NEWS ROuNDUP

The unbearable weight of massive incompetence: Your weekly financial news roundup

Every Monday, our financial and economic reporter, Kabalan Farah, brings you his take on the last week's financial news happenings and what is coming up.

The unbearable weight of massive incompetence: Your weekly financial news roundup

The Finance and Budget Committee in action, Thursday. (Credit: Ali Fawwaz, parliamentary photographer)

The following is based on real events, but we would have hoped they weren’t.

Some journalists let out a faint chuckle, others rolled their eyes, while the rest just sat there motionless, unfazed by what they just heard, shielded by their long years covering the endless mess that is Lebanese politics.

It was Thursday, and a few seconds earlier MP Ibrahim Kanaan (FPM/Metn), chair of the parliamentary Finance and Budget committee, had announced at a press conference that a new financial recovery plan was being drafted by the caretaker government.

When asked about the new plan, most MPs did not express any significant opinion about what they heard in the meeting or share details of the plan. They only disclosed that the government will set up a financial recovery fund to pay back depositors, using proceeds from state assets and from other sources.

Apparently, the document that they had received shortly before the meeting containing the details of the financial sector recovery plan was already outdated. And whatever information they had at that moment, was the little they managed to gather from the Prime Minister-designate Najib Mikati’s explanation.

This behavior is not something new to the government. With regards to the long-awaited capital control law, for instance, on multiple occasions, prepared drafts were discarded, only to be replaced by ambiguous, last-minute unwritten communications.. Whether this is the result of political tactics or simply incompetence is a matter for another day.

Still, what happened raises three important questions.

How many versions of the financial recovery plan will we have to endure before the government takes concrete actions? Time is of the essence and the government’s indecisiveness and flip flopping has only exacerbated the economic and financial damages. This is the third year since the start of the crisis, and we keep going back to the drawing board.

Irrespective if one is for or against the concept, what happened to the government’s multiple assurances that using state assets to pay back depositors is a no go? Caretaker Deputy Prime Minister Saade Chami vehemently denied less than a month ago that the state would rely on a sovereign fund or gold reserves to reimburse depositors who had lost their savings.

Where does the International Monetary Fund stand in relation to the new changes?

All we have is questions, and lots of them. Like why is the Monaco judiciary interested in Mikati’s affairs? And why is he denying it? Will the US waive sanctions to let Lebanon import gas from Egypt and Jordan? What’s new with the maritime border area demarcation? When will Parliament ratify the $150 million loan from the World Bank to pay for wheat imports? What was the message behind Hezbollah’s unarmed drones’ launch; was it meant for the Israelis or for the Arab foreign ministers’ meeting in Beirut?

The only answer we can offer is that the central bank’s foreign reserves dropped by $172 million in the last 15 days of June. This brings the total drop for the month to $680 million, the largest decline in reserves since September.

According to World Bank estimates, Lebanon’s economy is projected to contract by more than six percent in 2022. This comes on the back of a 10.5 percent and 21.4 percent contractions in 2021 and 2020 respectively.

And Emirates NBD, the Dubai-based lender, which had earlier in the year expected Lebanon's economy to return to growth in 2022, has now revised its forecast from a modest expansion of 2.9 percent to a contraction of 1.7 percent.

But who cares about the economy when there is a new episode of cabinet formation this week! Will President Michel Aoun succeed in extricating himself from Mikati’s hot potato? Oh, the suspense!

And what could be the most ironic news, the South African Revenue Service has won a legal battle against swimsuit model Candice van der Merwe, and won't have to repay her R44 million. The model had paid that money in settlement of a dispute about tax on a R142.9 million gift she received from former Lebanese prime minister Saad Hariri.

Until next week.


The following is based on real events, but we would have hoped they weren’t.Some journalists let out a faint chuckle, others rolled their eyes, while the rest just sat there motionless, unfazed by what they just heard, shielded by their long years covering the endless mess that is Lebanese politics.
It was Thursday, and a few seconds earlier MP Ibrahim Kanaan (FPM/Metn), chair of the...