Lebanese losing faith as politicians fumble over economy

BEIRUT (AP) — For days, Lebanese TV stations have been blanketed with live coverage as lawmakers held heated debate over a controversial austerity budget meant to salvage the flailing economy, with protests outside Parliament and critics denouncing its focus on tax hikes and wage cuts. Mohammed Badran, sitting in his barber shop empty of customers, couldn’t be bothered to watch.

Those officials don’t even know how much bread costs, he scoffed. “They basically don’t know anything about us.” The 33-year-old hair stylist — his hair spiked stylishly in front — sat idle in his salon in central Beirut with the TV tuned to Quranic recitals.

Badran said things have gotten worse the past few years. Taxes, utility bills and prices have increased, while his income hasn’t changed. Once, he kept about three quarters of his earnings; now he pockets only about a quarter, he said.

“Things have been turned upside down,” Badran said.

As the economic crisis deepens in Lebanon, so has the public’s distrust in the ability of the old political class, widely viewed as corrupt and steeped in personal rivalries, to tackle major reform.

Many fear a Greek-style bankruptcy, without the European Union (EU) to fall back on and with potentially more violent social unrest in the small country wedged between war-torn Syria and Israel.

A worker cleans a display in shop with Arabic on the window that read: ‘Liquidation’ and ‘the shop is for rent,’ in Hamra street, Beirut, Lebanon. – AP

A new budget that reduces public debts, improves governance and reforms infrastructure could unlock some USD11 billion in aid promised to Lebanon last year by European countries.

But after weeks of delay amid haggling among the government and lawmakers, the result is a bill that mostly taps into the pockets of average Lebanese, while critics say it does little to tackle structural issues and deeply entrenched corruption at the root of the crisis.

Still, during three days of live-televised debate this week, a line of lawmakers took to the podium to rail against it — most of them members in the government that designed it. In his speech Thursday, the finance minister snapped back, saying they were treating the budget like an “abandoned baby” no one would admit to fathering.

Critics said the theatrics were designed to absorb public anger over an economic slump that has hit hard.

Growth reached an all-time low of 0.2 per cent last year. It slowed further after the Central Bank halted subsidised housing loans through commercial banks, contracting the real estate market, a main engine for growth since 2012.

The budget deficit reached 11 per cent of GDP, up from 8.6 per cent in 2017, and public debt stands at 150 per cent of GDP, one of the highest in the world.

Fuel imports have increased, further deepening a trade deficit.

The downturn has impacted the country’s trusted banking sector.