Lebanon cabinet approves financial rescue plan

Government approves financial rescue plan with minor amendments as Lebanon seeks to salvage its economy.


Rescue plan must now win a vote of confidence in parliament


Unemployment in Lebanon stands at more than 30 percent


Lebanon has one of the world's highest debt-to-GDP ratios

BEIRUT - Lebanon's government said on Thursday it approved a rescue plan to pull the country from its worst economic and financial crisis in decades, which must now win a vote of confidence in parliament.

A draft policy statement seen by Reuters on Sunday outlined broad plans, including reducing interest rates, recapitalising banks, restructuring the public sector and seeking support from foreign donors.

The information minister said on Thursday that the cabinet had approved the plan with some amendments, which ministerial sources said were minor.

It was not immediately clear what changes were made to the 17-page statement, which is expected to be presented next week in parliament for the government to secure a vote of confidence.

Prime Minister Hassan Diab's cabinet was formed last month by the Iran-backed Hezbollah movement and its political allies, which hold a parliamentary majority.

The new government took office nearly three months after Saad al-Hariri's government resigned under pressure from sweeping protests against a ruling elite seen as corrupt and wasteful.

Diab's cabinet faces a liquidity crunch, shattered confidence in banks which have imposed informal controls, a weakened Lebanese pound and soaring inflation.

"It is imperative to start work immediately to make up for lost time," President Michel Aoun's office quoted him as saying on Thursday. Finance Minister Ghazi Wazni will meet with a World Bank delegation on Friday, his office said.

The government must decide its approach to looming sovereign bond repayments, including a $1.2 billion Eurobond maturing in March that the finance minister has described as "a fireball".

Anger at what protesters see as a kleptocratic oligarchy was initially fuelled by youth unemployment that stands at more than 30 percent and the abysmal delivery of public services such as water and electricity.

The long-brewing discontent was compounded by fears of a total economic collapse in recent weeks, with a liquidity crunch pushing banks to impose crippling capital controls.

Lebanon has one of the world's highest debt-to-GDP ratios and economists have said it is hard to see how the near-bankrupt country could repay its creditors.