{"id":16963,"date":"2022-01-22T13:12:50","date_gmt":"2022-01-22T17:12:50","guid":{"rendered":"https:\/\/bambisafkar.ca\/?p=16963"},"modified":"2022-01-22T16:19:30","modified_gmt":"2022-01-22T20:19:30","slug":"lebanon-hiba-storm-wion-and-an-open-letter-to-the-imf-orient-today","status":"publish","type":"post","link":"https:\/\/bambisafkar.ca\/index.php\/2022\/01\/22\/lebanon-hiba-storm-wion-and-an-open-letter-to-the-imf-orient-today\/","title":{"rendered":"Lebanon: Hiba storm (Wion) and an open letter to the IMF (Orient Today)"},"content":{"rendered":"\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"201\" height=\"113\" src=\"https:\/\/bambisafkar.ca\/wp-content\/uploads\/2022\/01\/LebanonDrawing.jpg\" alt=\"\" class=\"wp-image-16964\"\/><\/figure><\/div>\n\n\n\n<p>First, here is <em>Hiba <\/em>and how its snow\/cold is affecting the Lebanese population, especially in the context of their country&#8217;s economic fiasco: <\/p>\n\n\n\n<figure class=\"wp-block-embed-youtube wp-block-embed is-type-video is-provider-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe title=\"Hiba storm cover Lebanon&#039;s mountains &amp; several towns in a blanket of snow | World English News\" width=\"840\" height=\"473\" src=\"https:\/\/www.youtube.com\/embed\/Ez9agJ4JWzU?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n\n\n\n<p>Second, <em>Hiba<\/em> means a gift in Arabic. <\/p>\n\n\n\n<p>The best gift the world can give to the Lebanese population is to support financial accountability while helping them put an end to impunity of criminality in their country.<\/p>\n\n\n\n<p>Bearing the above thought in mind, Bambi would like to allow herself to thank <em>Orient Today<\/em> (the English edition of L&#8217;<em>Orient Le Jour<\/em>) for publishing (<a href=\"https:\/\/today.lorientlejour.com\/article\/1288415\/an-open-letter-to-the-managing-director-of-the-imf.html\">https:\/\/today.lorientlejour.com\/article\/1288415\/an-open-letter-to-the-managing-director-of-the-imf.html<\/a>) the following open letter to the Managing Director of the <em>International Monetory Fund<\/em> or IMF (<a href=\"https:\/\/www.imf.org\/en\/Home\">https:\/\/www.imf.org\/en\/Home<\/a>): <\/p>\n\n\n\n<p><em>\u201cDear Ms. Kristalina Georgieva,<\/em><\/p>\n\n\n\n<p><em>The Lebanese are suffering from a socio-economic catastrophe of nearly\nunprecedented global magnitude and gravity. We hold the ruling class \u2014 a coalition\nof sectarian leaders backed by a militia, with a complicit financial sector\nleadership \u2014 responsible. <\/em><\/p>\n\n\n\n<p><em>The crisis is the result of decades of ill-designed policies, poor\ngovernance, nepotism, corruption, and state-capture by the same elite that remain\nin power today. <\/em><\/p>\n\n\n\n<p><em>The balance of payments, currency, sovereign debt and financial crises\nhas been compounded by deliberate inaction on behalf of the political and\nfinancial actors who sought to exclusively protect their interests. <\/em><\/p>\n\n\n\n<p><em>Rather than accept losses, restructure the banking system and rebuild\nLebanon\u2019s economy, the ruling elite is enforcing the most violent and\ninequitable &#8220;adjustment&#8221; possible. Current policy combines an extreme\ncurrency devaluation, a huge inflation tax, unregulated capital controls, an\nunprecedented contraction of the economy, and an implicit incentive to\nemigrate. <\/em><\/p>\n\n\n\n<p><em>The result is mass unemployment, poverty, and brain drain. The pillars of\nlong-term growth are being systematically destroyed and many residents must now\nrely on humanitarian assistance and informal support networks. <\/em><\/p>\n\n\n\n<p><em>Two and a half years have been wasted since the default of both the state\nand the banking sector, marking the bankruptcy of the post-war rent-based\neconomic model. It is only now that authorities seem ready to negotiate the\nterms of a stabilization program with the Fund, long after having protected\ntheir interests. <\/em><\/p>\n\n\n\n<p><em>The current adjustment clearly indicates that their objective is to\nstabilize the economy at a very low level, with weak-value-added activities,\nmainly based on informal trade, regardless of the extent of poverty and\ninequality. <\/em><\/p>\n\n\n\n<p><em>The IMF\u2019s responsibility is not to condone this crime. <\/em><\/p>\n\n\n\n<p><em>In this context, we call upon the IMF to consider the grave concerns\noutlined in this letter in its negotiations with the Government of Lebanon. <\/em><\/p>\n\n\n\n<p><em>While we welcome the involvement of the Fund, which can be a historical\ninflection point for the country, we are wary of, and shall vehemently reject,\nany agreement that compromises the principles set below thereby jeopardizing\nthe equitability and effectiveness of any potential program. <\/em><\/p>\n\n\n\n<p><em><span style=\"text-decoration: underline;\">Holistic and sustainable framework underpinned by an adequate governance structure<\/span>: The authorities\u2019 approach towards the crisis has relied on short-term piecemeal measures that have proven inefficient and unjust. Any financing plan engaging Lebanese taxpayers over several years must rest on a holistic, comprehensive macro-fiscal-banking\/financial-monetary program. It should also aim at rebuilding a sovereign, effective and sustainable state with a regulatory environment conducive to private investment in competitive sectors, and one that guarantees to its citizens their fundamental social rights. <\/em><\/p>\n\n\n\n<p><em><span style=\"text-decoration: underline;\">Coherent exchange rate regime and new leadership at Banque du Liban<\/span>: The unification of multiple exchange rates is key for the restoration of sound monetary policy away from the pegged exchange rate regime, and a foundation of economic sovereignty. The central bank restructuring process must be assigned to a new management, committed to good governance and transparency and capable of re-instilling the confidence and credibility at the apex of the banking system. <\/em><\/p>\n\n\n\n<p><span style=\"text-decoration: underline;\">Debt restructuring<\/span><em>: The restructuring of public debt and that of the banking system and Central Bank are essential for long-term stabilization and recovery. A significant reduction in the stock of sovereign debt is necessary to create the fiscal space needed for growth-inducing and strategic spending on social programs and infrastructure. Closing the huge gap at the central bank is key for sound monetary policy. <\/em><\/p>\n\n\n\n<p><em><span style=\"text-decoration: underline;\">Wholesale banking sector reform and an independent task force<\/span>: A new banking resolution framework needs to lay the foundations of a new model for the Lebanese banking sector. This includes the abolition of banking secrecy, the right sizing of the sector, and the provision of incentives for banks to support long-term growth. The restructuring process should be entrusted to an independent authority. <\/em><\/p>\n\n\n\n<p><em><span style=\"text-decoration: underline;\">Bank shareholder losses<\/span>: The fair distribution of financial losses is a priority. We reject the current strategy of socialization of losses. Any bail-out scheme is unacceptable, and the distribution of financial losses must follow a \u201closs waterfall distribution\u201d starting with shareholders\u2019 equity, in line with best practices. <\/em><\/p>\n\n\n\n<p><em><span style=\"text-decoration: underline;\">Strategic use of remaining state assets<\/span>: State-owned enterprises, real estate and gold reserves are strategic resources that should be used to ensure social protection and economic recovery. They cannot be used to offset the financial losses of depositors who constitute less than half of the population, notwithstanding the extreme concentration of deposits (13 percent of the accounts hold 90 percent of deposits). That being said, gold assets, technically on the balance sheet of the central bank, could be partially allocated to protect the savings of certain categories of small depositors in the context of a comprehensive plan. <\/em><\/p>\n\n\n\n<p><em><span style=\"text-decoration: underline;\">Protection of small depositors and pension funds<\/span>: The allocation of losses should be gradual to protect smaller depositors. Deposits corresponding to pension funds (unions, professional orders and NSSF, etc.) must be protected and treated as first-class creditors. <\/em><\/p>\n\n\n\n<p><em><span style=\"text-decoration: underline;\">Audit of financial sector activities<\/span>: A forensic audit must be conducted on the accounts of all shareholders, members of boards of directors, members of the general management of the financial institutions and the central bank, as well as those who have exercised or are exercising political functions, and those who obtained major contracts with the government, to determine if any undue or excessive profits have been taken, or if transfers abroad occurred after October 2019. This audit fulfills the need to put an end to the culture of impunity that has prevailed since the amnesty in the aftermath of the 1975-90 Civil War. It is also aligned with Lebanon&#8217;s international commitments in the fight against money laundering, tax evasion, and embezzlement. <\/em><\/p>\n\n\n\n<p><em>&nbsp; &nbsp; \u2022 Fiscal policy that prioritizes growth and social\nprotection: A fiscal overhaul, anchored in a medium-term planning framework,\nshould ensure a complete detour from the state\u2019s current mismanagement and\nredirect spending towards social services and growth enablers namely: <\/em><\/p>\n\n\n\n<p><em>&nbsp; &nbsp; \u2022 A social protection system based on universal access to\nhealthcare and education. <\/em><\/p>\n\n\n\n<p><em>&nbsp; &nbsp; \u2022 Key infrastructure to support economic growth:\nelectricity, telecommunications, and public transport. State intervention\nshould be limited to areas where the multiplier effect is immediate on private\ninvestment, which should be the engine of growth. <\/em><\/p>\n\n\n\n<p><em>&nbsp; &nbsp; \u2022 A transformed civil service, made efficient and\ntransparent by investing in technology and government digitization. This\nassumes the backing of a retirement fund and a training fund. <\/em><\/p>\n\n\n\n<p><em>&nbsp; &nbsp; \u2022 Security forces capable of national defense. <\/em><\/p>\n\n\n\n<p><em>&nbsp; &nbsp; \u2022 Tax reform: Even though Lebanon has been savagely\nimpoverished, it still possesses important resources that can be used to the\ncountry\u2019s socio-economic recovery if managed in a fair, efficient and\ntransparent manner. Reforming income tax rates and schedules is needed to\nreduce inequality and informality and raise fiscal revenues. <\/em><\/p>\n\n\n\n<p><em>As the ruling elite faces a destabilizing crisis, its top priority is to\nperpetuate itself, buy time ahead of key electoral milestones, evade\naccountability, and avoid assuming losses. These same priorities are guiding\nits negotiations, and a possible commitment, with the Fund. Instead, priorities\nshould be set to reverse the severe social hemorrhage, ensure equitable loss\ndistribution, and guarantee sustainable economic recovery. <\/em><\/p>\n\n\n\n<p><em>As such, the upcoming discussions will place great responsibility on the\nIMF, whose intervention in the Lebanese crisis will enter the annals of\nhistory, and should not, by any means, contribute to the further build-up of\nodious debt and the perpetuation of an illegitimate regime, particularly ahead\nof the upcoming parliamentary elections scheduled for May 2022.\u201d&nbsp;<\/em><\/p>\n\n\n\n<p><strong><em>Kulluna Irada is a Lebanese NGO.&nbsp;<\/em><\/strong><\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/bambisafkar.ca\/wp-content\/uploads\/2022\/01\/heart-14.jpg\" alt=\"\" class=\"wp-image-16968\" width=\"144\" height=\"144\" srcset=\"https:\/\/bambisafkar.ca\/wp-content\/uploads\/2022\/01\/heart-14.jpg 300w, https:\/\/bambisafkar.ca\/wp-content\/uploads\/2022\/01\/heart-14-150x150.jpg 150w\" sizes=\"(max-width: 144px) 85vw, 144px\" \/><\/figure><\/div>\n","protected":false},"excerpt":{"rendered":"<p>First, here is Hiba and how its snow\/cold is affecting the Lebanese population, especially in the context of their country&#8217;s economic fiasco: Second, Hiba means a gift in Arabic. The best gift the world can [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/bambisafkar.ca\/index.php\/wp-json\/wp\/v2\/posts\/16963"}],"collection":[{"href":"https:\/\/bambisafkar.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bambisafkar.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bambisafkar.ca\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bambisafkar.ca\/index.php\/wp-json\/wp\/v2\/comments?post=16963"}],"version-history":[{"count":14,"href":"https:\/\/bambisafkar.ca\/index.php\/wp-json\/wp\/v2\/posts\/16963\/revisions"}],"predecessor-version":[{"id":16979,"href":"https:\/\/bambisafkar.ca\/index.php\/wp-json\/wp\/v2\/posts\/16963\/revisions\/16979"}],"wp:attachment":[{"href":"https:\/\/bambisafkar.ca\/index.php\/wp-json\/wp\/v2\/media?parent=16963"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bambisafkar.ca\/index.php\/wp-json\/wp\/v2\/categories?post=16963"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bambisafkar.ca\/index.php\/wp-json\/wp\/v2\/tags?post=16963"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}