BEIRUT (Reuters) - French Foreign Minister Jean-Yves Le Drian visited Lebanon on Thursday to urge the government to enact badly-needed reforms to help steer the country out of an acute financial crisis.
The crisis, rooted in decades of state corruption and waste, marks the biggest threat to Lebanon’s stability since the 1975-90 civil war. A collapsing currency has led to soaring inflation and poverty and savers have lost free access to accounts in a paralysed banking system.
Former colonial ruler France has led international efforts to get Lebanon to reform, hosting a donor meeting in 2018 when more than $11 billion was pledged for infrastructure investment contingent on reforms which were promised but not delivered.
“(Le Drian) wants to send a strong message to the Lebanese authorities and politicians on the need to reform urgently and stress our incapacity and refusal ... to provide economic and financial support until concrete acts and swift reforms are started,” a European diplomat said.
Le Drian met with President Michel Aoun and Prime Minister Hassan Diab. Diab told him Lebanon had accomplished a number of reforms despite “obstacles” and had set out a timeline for further reforms, government sources said.
Le Drian was due to give a news conference later on Thursday.
Lebanon began talks with the International Monetary Fund (IMF) in May but these have been put on hold in the absence of reforms and as differences arose between the government, the banking sector and politicians over the scale of vast financial losses in the system.
Diab also told Le Drian that authorities had approved an audit of the central bank to uncover financial gaps and their causes, and pave the way for potential audits of other institutions, the government sources said.
One area donors want to see progress is in fixing the state-owned electricity grid which bleeds up to $2 billion a year in public funds while failing to meet the country’s power needs.
Lebanon, with one of the highest public debt burdens in the world, defaulted on its foreign currency sovereign debt in March, citing critically low reserves. The Lebanese pound has lost some 80% of its value since October.
