As Protests Rage On, Lebanon Asks IMF for Assistance
“The IMF is anyway very predictable when it comes to their policy recommendations. It’s almost always a combination of austerity, privatizations, revisiting the currency regime.”
On Wednesday, the Lebanese government requested the International Monetary Fund offer technical help to shore up the country’s economy in the face of the current economic crisis and looming debt repayments.
The move happened after the Lebanese government won a vote of confidence in Parliament while protesters attempted to stop the proceedings in a demonstration outside. More than 350 protesters were injured in clashes with security services outside the Parliament building.
“We’re not giving them a chance, we have tried for 40 years, we have gotten old and we are going to die giving them chances. There isn’t any more time,” a protester told Al Jazeera.
While the government received the necessary votes, 63 of 84, Prime Minister Hassan Diab has done little to assuage the fears of many protesters.
Deploying the IMF is unlikely to be a popular move considering the Fund’s history of austerity. Lebanon cited an impending debt repayment of $1.2 billion to Eurobond on March 9th as the reason for drafting in the consultation of the IMF.
Nonetheless, the IMF preemptively passed the buck on to the Lebanese government in a press statement, “any decisions on debt are the authorities’, to be made in consultation with their own legal and financial advisers.”
The Lebanese People: Stuck in the Middle
For months, Lebanon has been teetering on economic collapse, and many citizens have borne the brunt of the negative impact.
Protests have been raging since October 2019, and they have only increased in voracity. Parliament has been shut down multiple times due to violent protests and after the confidence vote on Tuesday, one member of Parliament was hospitalized due to a barrage of projectiles.
While the protests may seem extreme to a Western audience, the livelihoods of many Lebanese people have been absolutely ruined by economic despair. Last year, unemployment was upwards of 50%, and many of those who are employed are experiencing delayed paychecks.
Lebanon has also experienced extreme currency devaluation, and some estimates have put expected poverty to rise to nearly 50% of the population.
If the economy does not improve, violent protests like the ones seen on Tuesday are likely to persist and increase in their violence.
The formation of a cabinet under new Prime Minister Hassan Diab has raised eyebrows among protesters and critics of the government.
One of the primary complaints against the Lebanese government has been the institutional corruption harming the economic future of Lebanon. PM Diab was formerly the Minister of Education for three years, thus coming from a background that complaints originate from.
IMF – Short-Term Fix?
The IMF has been called in to solve multiple debt crises in recent years, and it has routinely implemented austerity measures to cut public spending. Recent countries where this strategy has been used are Jamaica, and most notably Greece.
Unsurprisingly, there was a massive backlash in both countries as poor citizens were asked to tighten their belts even more in the face of gloomy economic forecasts.
Considering the level of protests in Lebanon, the government will have to tread lightly, but it may ultimately opt for such short-term measures in favor of considering the long-term economic health of the country.
“The IMF is anyway very predictable when it comes to their policy recommendations. It’s almost always a combination of austerity, privatizations, revisiting the currency regime,” Mohamad Faour, postdoctoral research fellow in banking and finance at University College Dublin, told Middle East Eye.
A study from the International Labor Organization outlined alternatives to austerity including increasing social security, tax revenue, and eliminating illegal financial flows.
Multiple foreign countries including the United States have expressed misgiving about continuing to funnel foreign aid to the country while its economy is not in order, so the Lebanese government may default to the IMF recommendations.
In the end, protesters will likely continue to protest in the face of similar solutions. As a university professor told Al Jazeera, “they were chosen by the same people. How can we expect anything different?”