PM Mikati says financial recovery plan will have fair losses distribution

Prime Minister Najib Mikati

Prime Minister Najib Mikati said on Monday the financial recovery plan to be set by the government will involve a fair distribution of losses suffered by the financial system.

In an interview with LBCI, Mikati also said the rights of small depositors would be protected.

“The inclination is definitely to protect the small depositors who have between $50,000 to $70,000 accounts, and these will take their money in dollars for sure,” Mikati said.

Lebanese have been largely locked out of their dollar deposits for almost two years, forced to withdraw in local currency at a rate with a haircut of almost 80 percent.

Mikati will meet with the advisory firm Lazard soon to see how a financial recovery plan it drafted for Lebanon could be developed into a “more realistic” vision for getting the country out of its crisis, he said.

Mikati also said Lebanon would be very lucky if it was able to reach a framework for an agreement with the International Monetary Fund by the end of the year. Mikati took office earlier this month determined to revive IMF talks.

Lazard helped the previous government draw up a financial rescue plan that identified losses of some $90 billion in the financial system.

But the plan was shot down by objections from the banks, which said it made them foot too much of the bill for the collapse, in addition to opposition from the central bank and the ruling political elite that got Lebanon into its crisis.

Reaching agreement on the losses is seen as the first step towards a deal with the IMF, which endorsed the figures in the previous government’s plan.

“I will not announce anything except if the whole financial recovery plan is complete,” Mikati told LBCI.

“We have the financial recovery plan, I have asked the company that set it to come to Lebanon and they will come and I will have a meeting with them in the coming days … to see how we can update this plan”, Mikati said.

“I want to ask for a more realistic plan to get out of this crisis we are in,” he added.

Mikati said he was not planning to privatise state assets.

Since taking office, Mikati – a Sunni Muslim – has said he will not allow Lebanon to be used as a platform for actions against other Arabs, implicit criticism of the Iran-supported Shi’ite Muslim group Hezbollah, which backs his government.

But on Monday, Mikati said there was currently no plan for him to visit Saudi Arabia, which once spent heavily in Lebanon but has shunned it for years because of Hezbollah’s influence, and the matter of Lebanon’s Gulf ties was not discussed with French President Emmanuel Macron during a visit to Paris last week.

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