Kulluna Irada, a Lebanese civic organization for political reform, issued on Wednesday an open letter outlining 10 principles to the IMF, raising its concerns about the upcoming funding discussions with the Lebanese government.
It addressed the principles on which these discussions must be based to meet the people’s needs and demands.
The letter started with: “The Lebanese are suffering from a socio-economic catastrophe of nearly unprecedented global magnitude and gravity. We hold the ruling class – a coalition of sectarian leaders backed by a militia, with a complicit financial sector leadership – responsible.”
The organization talked about the crisis, describing it as resulting from nepotism and corruption, adding that the consequences are “mass unemployment, poverty, and brain drain.”
The 10 principles set for the upcoming discussions, as the letter indicated, “bear great responsibility for the IMF, whose intervention in the Lebanese crisis will go in the annals of history, and should not, by any means, contribute to further build-up of odious debt and the perpetuation of an illegitimate regime, particularly ahead of the upcoming parliamentary elections.”
The 10 principles are the following:
1- “Holistic and sustainable framework underpinned by an adequate governance structure: The authorities’ approach towards the crisis has relied on short-term piecemeal measures that have proven inefficient and unjust.”
2- “The Central Bank restructuring process must be assigned to a new management, committed to good governance and transparency and capable of re-instilling confidence and credibility at the apex of the banking system.”
3- “The restructuring of public debt and that of the banking system and the Central Bank are essential for long-term stabilization and recovery.”
4- “Wholesale banking sector reform and an independent task forces. 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.”
5- “The fair distribution of financial losses is a priority. Any bail-out scheme is unacceptable, and the distribution of financial losses must follow a “loss waterfall distribution” starting with shareholders’ equity, in line with best practices.”
6- “Properties, state-owned enterprises, and gold are strategic resources that should be used to ensure social protection and economic recovery. 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.”
7- “Protection of small depositors and pension funds: 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.”
8- “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, to determine if any undue or excessive profits have been taken, or if transfers occurred post-October 2019.”
9- “Fiscal policy that prioritizes growth and social protection: based on universal access to healthcare and education.Key infrastructure to support economic growth: electricity, telecommunications, and public transport, a transformed civil service made efficient and transparent and Security forces capable of national defense.“
10- “Tax reform priorities should be set to reverse the severe social hemorrhage, ensure equitable loss distribution, and guarantee sustainable economic recovery.”
Needless to point out that the Lebanese civic organizations and people are well aware of the solutions needed to be implemented to save the country from its continuous collapse. The issue is not the lack of solutions but the unwillingness of the ruling officials to implement them.