Request 3 billion government in exchange for writing off $ 72 billion in deposits

President of the Lebanese Economic Association d. Munir Rashid – Republic

It is clear that the International Monetary Fund is trying hard to conclude a contract with the state, but this initial achievement with the Fund’s mission and not with the Fund’s management is accompanied by procedures and conditions that contain major gaps, and promises of a state that is not credible.
The simulation of the fund focuses mainly on managing losses rather than moving to measures that lead to the recovery of the economy and the restoration of confidence. The prevailing belief that the IMF is the savior and savior of the crisis is a pure illusion assumption, and it has helped to delay reform. The urgent need is to find a solution that preserves and does not destroy the citizen’s savings, because the citizen is the mainstay of the nation and not the government. The government and the IMF must adhere to complete transparency, refraining from the method of enforcing laws and legislation under false slogans.

The government and the fund inform us that they intend to distribute the losses fairly, but the basis of justice for them is subject to bargaining and discretion, and in their eyes it seems as if it honors the culprits and accuse the innocents. The International Monetary Fund continues, saying that the distribution of losses is one of the pillars of important solutions for the banking system and the financial crisis. The citizen was angry and terrified because an international institution like the IMF stands by a government that is considered one of the most corrupt in the world, and demands conditions that serve the banks and the government, not the citizen . The initial agreement forms a certificate of absolution for the government, as it aims to bear the burden of the cost of reform on the citizen.

Summarizing eight previous procedures in the agreement between the IMF mission and the Prime Minister will not lead to the recovery of the economy, and will have different consequences, the most important of which is the weakening of confidence and the continuation of the recession. What was not taken into account: limited knowledge of reform, lack of desire and ability to reform the government.

The most important proposed measures are to bear most of the losses for the citizen, the continuation of the multiplicity of exchange rates and the implementation of the “Capital Control” Act, which will suppress private investment. Control of external capital flows reduces fiscal and monetary discipline, leads to distortions that negatively affect growth and employment, discourages investment, increases financing costs and reduces capital flows from abroad. The proposed law in itself stems from the concept of misconception. It’s a strange combination of restrictions on bank deposit withdrawals and control over external capital inflows and current account transactions. The majority of the remaining proposals consist of strategies and laws rather than actual actions. It is capable of curbing the economy and does not build a foundation for growth, nor does it build confidence, and it will destroy the basic pillars of the Lebanese economy.

Depreciation of deposits as a solution clearly indicates that the government does not have the correct vision for reform. The write-off of at least $ 72 billion in deposits from the banks ‘balance sheet liabilities will be offset by a parallel write-off of the banks’ assets, the liabilities of the Banque du Liban and the state’s debt. The banks welcomed him as they announced that they were supporting the initial agreement with the Fund’s mission because they were released from their debt.

And because we do not have the luxury of time, as the government has said, do not wait and be brave and immediately do the following:

The complete liberalization of the exchange rate, and this measure has a direct and positive impact, and above all, that it:

Association of the old and new bank dollars according to the market rate, and ending this heresy aimed at writing off deposits.

Solve the deposit crisis. Liberalization will allow withdrawals from dollar deposits in Lebanese pounds, according to the market rate.

– Improving the performance of the balance of payments, especially in alternative goods and services.

– Supports savings as well as investment for the private sector.

– Supports real growth in all sectors, especially the sectors of production of goods that are alternative to imports.

– Improves the financial position of the state due to its direct effect on increasing revenue.

– Reduce the absolute public debt.

– Stop indirect support through various exchange rates.

– This leads to the cessation of the weakening of the exchange rate, and to the stability of prices.

Restore confidence in the banking system as banks realize how to deal with depositors.

– Limit the responsibility of the Bank of Lebanon and limit it to the area of ​​monetary policy and deprive it of discretion in the pricing of the lira.

Banks’ frequent violations of the laws and their disregard for depositors will not restore confidence and will not be easily obtainable.

The adoption of a balanced budgetary policy will have a positive impact:

Contribute to support the balance of payments balance.

Improving the ability to sustain debt service.

Stop waste in the public sector and improve the productivity and growth of the private sector.

Rescheduling all financial assets and liabilities for the public and private sectors, and it regulates the financial sector and restores confidence in it, ending the need to place restrictions on the transfer of capital and provides a fair alternative to the write-off of liabilities and assets of banks.

Start with the privatization of the public sector to end the rampant corruption in this sector, which has contributed greatly to the build-up of debt and the deterioration of the economy, so that it is widely owned by citizens (and is not a monopoly of the rich), by listing its shares on the Beirut Stock Exchange, with a maximum restriction on individual ownership. Whoever believes that the state should preserve the public sector has ignored or supported the mismanagement and corruption that has prevailed in it for decades.

As for the uncertain wait until an agreement is reached with the IMF to obtain $ 850 million annually for four years, its cost will be very high and at the expense of the citizen.

Leave a Comment