No 'Magic Wand' to Fix Lebanon Crisis, Says Mikati

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No 'Magic Wand' to Fix Lebanon Crisis, Says Mikati

Lebanon's new Prime Minister Najib Mikati, who took office last week promising to revive IMF talks to unlock aid, said on Monday there was no time to lose and no easy path to tackle one of history's worst economic meltdowns.

The new government, formed after more than a year of political stalemate, finally met for the first time on Monday, replacing a caretaker administration that had quit following last year's huge explosion in Beirut.

Mikati told cabinet that it would take will, determination and a plan to achieve the hopes of the population.

"It is true that we don't have a magic wand. The situation is very difficult," the billionaire-turned-politician said, according to a statement.

He pledged to work hard to resolve shortages of fuel and medicine, supplies of which have dried up as the import-dependent nation's hard currency reserves have run out.

Lebanese hope the new administration will finally plot a path out of a crisis that has sunk the currency by some 90% since late 2019 and forced three quarters of the population into poverty.

Western governments including the United States and France have welcomed the cabinet formation, while urging it to quickly implement reforms that international lenders have demanded before loans can flow.

"We need the help of the IMF, the World Bank, regional and international funds," President Michel Aoun, who approved the new government after months of bargaining, told the cabinet. "What is required are urgent, decisive steps to start reforms."

Mikati has previously said resuming IMF talks would be a priority. On Friday, he said divisive politics must be put to one side and that he could not go to IMF talks if he faces opposition at home.

In a boost to the government, the finance ministry said Lebanon would receive a total of $1.135 billion in IMF Special Drawing Rights (SDRs), more than the $860 million's worth that had been expected as part an IMF general allocation.

In addition to the $860 million from 2021, the sum includes$275 million dating from 2009, the ministry said, adding the sum would be deposited with the central bank on Sept. 16.

IMF talks broke down last summer with politicians and banks disputing the scale of vast losses mapped out by a government financial recovery plan which the Fund endorsed. Aoun urged the government to include that financial recovery plan in its policy programme, as well as reforms set out by a French roadmap last year.

The previous government failed to implement structural reforms which donors have been urging for years, including measures to address state corruption and waste at the root of the crisis.

Source: Reuters