Lebanese cabinet meets after hiatus, amid friction over budget

  • Cabinet sessions stalled by dispute over Beirut port blast inquiry
  • Lebanon to begin online talks with IMF on Monday
  • Political parties, including Hezbollah, oppose draft budget

BEIRUT, Jan 24 (Reuters) – Lebanon’s cabinet met on Monday for the first time since October, convened after Iran-backed Hezbollah ended a boycott, but the powerful group and others stood aside. opposed to a draft budget which was the main item on the agenda.

As Lebanon is mired in one of the world’s worst financial crises, Prime Minister Najib Mikati hopes the passage of a budget will help talks with the International Monetary Fund (IMF), which officials say Lebanese, will start on Monday.

Lebanon has failed since 2020 to make progress toward securing an IMF bailout, with no signs of long-delayed reforms sought by donors.

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Mikati said he hoped the firm would “cooperate in a spirit of responsibility, away from disputes.” A row over the investigation into the 2020 Beirut port explosion had led Hezbollah and its closest allies to boycott the firm.

But criticism of the budget suggests trouble ahead.

Hezbollah, heavily armed, said on Sunday the plan did not bode well, criticizing the proposed tax increases and saying it could not support it.

The Free Patriotic Movement, the Christian party founded by President Michel Aoun, opposed an article that allows the finance minister to fix the exchange rate.

The Lebanese pound has lost more than 90% of its value since the crisis erupted in 2019, plunging most Lebanese into poverty.

CURRENCY COMPLICATIONS

Finance Minister Youssef Khalil said there was no agreement yet on an exchange rate for the budget, “but the numbers might not be far” from a rate of between 15,000 and 20,000 pounds per dollar, Al Jadeed TV reported.

He was referring to rates reported by Reuters on Friday, when an official source said that range would be applied to operating expenses. Read more

He said the rate determined by a central bank platform would be applied to customs transactions. This rate averaged 22,700 pounds per dollar on Friday, slightly below the parallel market rate of 23,300 on Monday.

The unification of Lebanon’s multiple exchange rates is a policy recommendation of the IMF.

A previous attempt to negotiate with the IMF failed in 2020 due to a disagreement between the government, commercial banks and the central bank over the extent of financial system losses and how they should be distributed.

Beirut said in December it had agreed on a figure of $69 billion for losses, which the IMF said it was assessing.

The government has yet to release any new proposals on how the losses could be distributed.

An IMF spokesman said on Friday that the Fund intended “to remain closely engaged in the coming weeks to help the authorities formulate a comprehensive reform strategy.”

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Written by Nayera Abdallah and Tom Perry; Editing by Hugh Lawson and Andrew Cawthorne

Our standards: The Thomson Reuters Trust Principles.

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