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Fri 12 Jun 2020 03:32 PM

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Crisis talks in Lebanon as currency plunges to new depths

Protesters have returned to the streets, setting tyres on fire and blocking roads

Crisis talks in Lebanon as currency plunges to new depths

Prime Minister Hassan Diab chaired an 'urgent' cabinet meeting on Friday.

Lebanon's government held crisis talks Friday after the country's currency plumbed record lows on the black market, triggering a night of angry protests over the worst recession in decades.

An economic downturn since last autumn has seen widespread layoffs and swingeing pay cuts that have plunged 45 percent of the population into poverty.

The worst economic turmoil since the country's 1975-1990 civil war has sparked an unprecedented street movement against a political class accused of being corrupt and incompetent.

After the Lebanese pound hit a new low Thursday, down around 70 percent from its official rate, protesters took to the streets after sundown, setting tyres on fire and blocking roads including in the capital Beirut.

Demonstrators chanted against a government that has been unable to arrest the economic decline, as well as against the governor of the central bank Riad Salame.

"Riad Salame, game over," read the front page of the Al-Akhbar newspaper close to Shiite movement Hezbollah on Friday morning.

"Revolution of hunger," the Jumhuriya daily said.

Prime Minister Hassan Diab chaired an "urgent" cabinet meeting, also attended by the central bank governor and representatives of the country's money changers, the National News Agency said.

Another government meeting is planned at the presidential palace in the afternoon.

Central bank chief under fire

Tensions have grown recently between the Hezbollah-backed government and the central bank's governor.

Experts say the cabinet would like to see Salame removed from the position he has held since 1993.

Protesters accuse Salame of having encouraged a policy of increasing state borrowing over the decades that they say benefited only the country's banking and political elite.

Anger against banks has also risen in recent months, after they banned all transfers abroad and gradually restricted dollar withdrawals, forcing those in need to buy the greenback at much higher rates on the black market.

"Several currents taking part in the protests want to topple the central bank governor and hold him accountable for the financial" crisis, analyst Imad Salamey said.

"Hezbollah wants to change the central bank chief," the Lebanese American University professor told AFP.

Hezbollah supporters joined the demonstrations late Thursday, despite usually being against the protest movement since October 17.

The previous government stepped down under street pressure just weeks into those demonstrations, and Diab's cabinet started working earlier this year.

Traders strike

Lebanese media reported the exchange rate had reached 6,000 pounds per dollar on the black market on Friday, compared to the official peg of 1,507 in place since 1997.

The central bank late Thursday hit out at "baseless" information on social media of "exchange rates at levels far from reality, which mislead citizens". 

Lebanon - one of the most indebted countries in the world with a sovereign debt of more than 170 percent of its GDP - went into default in March.

It started talks with the International Monetary Fund last month in a bid to unlock billions of dollars in financial aid, but these are still ongoing.

Unemployment has soared to 35 percent nationwide, with Lebanese living in the impoverished port city of Tripoli especially affected.

Traders in the northern city called for a "general strike" on Friday over "heavy losses" and their "plummeting buying power".

Lebanon enforced a lockdown in mid-March to stem the spread of the novel coronavirus, which dealt a further blow to businesses already reeling from the raging economic crisis.

The Mediterranean country has recorded some of the lowest rates in the Middle East since the start of the pandemic, with just 1,422 cases of Covid-19, including 31 deaths as of Friday.

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