
by DR. DANIA KOLEILAT KHATIB — arabnews.com/ — The Lebanese government this week leaked its long-awaited “reform plan,” which is supposed to form the basis for its negotiations with the International Monetary Fund (IMF) and international donors. The plan is well drafted with technical and professional language and it has many figures, numbers and charts that are guaranteed to impress at first sight. However, it is an austerity plan, where the average citizen will bear the brunt of bailing out the country while existing politicians get a free pass. At the outset, the plan states some realities that have long been denied by the political system. The plan admits that the currency is overvalued, which hinders competitiveness, and that the dollar peg is no longer sustainable. It recognizes that the central bank’s reserves are depleted — something the governor has repeatedly refuted. It also admits that a full-fledged IMF program cannot be avoided. The plan makes other important confessions. The first is to pinpoint the destructive role the central bank played by acting like the government’s cashier and the lethal instruments it utilized; namely the financial engineering that has been in use since 2016. It also admits that the banking sector is too big for the Lebanese economy, standing at about 425 percent of gross domestic product.
It also lays down clear objectives, such as fighting corruption, restructuring debt and the financial system, reforming the public sector, and streamlining expenditures. Though the report says the objectives will be attained if reforms are conducted and if external support is garnered, it still fails to offer a proper execution mechanism, a proper timeline or an indication as to how the Lebanese public and the international donors can verify that the reforms have been conducted. The plan says that the treasury will increase tax audits without giving any explanation about how. The plan talks about tighter control of customs, in ports, airports and at land borders. Again, there is no explanation of how compliance can be measured. Smuggling, which is a large part of Lebanon’s tax evasion, is conducted by influential political parties. It is almost impossible, in the current situation, for the Lebanese government or security forces to stop it. Reforms are impossible with the current political structure. This government was formed only when the corrupt politicians — those who brought the country to its knees — agreed on dividing the positions among themselves and putting their people in the key roles, while they rule from behind the scenes. Will they allow the government to prosecute them? Very unlikely.









