|
|
|
|
|
Atlas Liberty Forum and Freedom Dinner
November 6-7, 2019- Crowne Plaza Hotel, Times Square, New York City, United States
LIMS President Dr. Patrick Mardini and Director Ms. Kristelle Mardini attended the Atlas annual Liberty Forum and Freedom Dinner 2019. The 2-day event gathered over 800 people from 50 countries to share challenges and experiences on how to effectively advance market reforms.
|
|
|
|
Finalist of the 2019 Templeton Award
LIMS was nominated as a finalist for the prestigious Templeton Freedom Award, which recognizes our contribution to electricity reform. In May 2019, the Lebanese parliament voted in favor of Law 129, authorizing private independent power producers to enter the market and sell electricity. This victory for LIMS averted the spending of $5.4 billion, which translates to $125 saved by the average taxpayer each month.
|
|
|
Interviewing the Finalists for the Templeton Freedom Award
In a panel discussion, finalists for the Templeton Freedom Award had the chance to communicate to more than 50 attendees the impact they achieved in their home country. Dr. Mardini explained how LIMS advocated a zero-dollar solution to the electricity problem in Lebanon. The institute moved on 2 parallel axes: (1) working with policy makers, and not against them, to build a trustful and constructive relationship, and (2) raising the public’s awareness on the importance of allowing the private sector into electricity production.
|
|
|
|
Lebanese Banks Facing a Run on Dollar Deposits
|
|
|
|
|
Lebanon’s Struggling Banking Sector
December 6, 2019- Al Joumhouria Newspaper, Beirut, Lebanon
In 2019, economic growth plummeted to -1% and the Lebanese pound was devalued at the exchange agents, breaking the official peg for the first time since the 90s. Dr. Patrick Mardini explained that people understood that banks lent their deposits to the Lebanese government. Since the government is about to default, depositors rushed to withdraw their money creating a bank run. The central bank reacted by becoming a lender of last resort, expanding the supply of Lebanese pounds, which led to a higher devaluation of the currency and more inflation. Dr. Mardini suggested that the government cut spending by $7 billion, which would stop the fiscal deficit and restore credibility in Lebanon’s ability to repay debt. It will also increase the price of the Lebanese Eurobonds and restore the value of banks’ assets. He also argued for opening the banking sector and allowing international banks to buy struggling local banks.
Click Here to Read the Article in Arabic
Other Media Outlets: Alkalimaonline, Akhbarnaonline, Institut Des Finances, MTV News, Shafaqna, Sahafaty.Net, Khabar.One |
|
|
|
Central Bank’s Circular Legalizes Haircut on Interest Payments
December 4, 2019- Al Ektisad Online, Beirut, Lebanon
The Lebanese central bank issued Circular No. 536 on December 4, 2019, announcing that 50% of the interest on dollar deposits will be paid in Lebanese pounds at the official (pre-depreciation) exchange rate. LIMS Senior Policy Analyst Mr. Majdi Aref stated that this circular has legalized what banks have already been doing, by paying back part of people’s withdrawals in the local currency and the other part in dollars. He indicated that these restrictions hurt the banking sector’s credibility. To regain trust in the Lebanese economy, he proposed reducing government spending by dismantling monopolies in vital sectors like the airline, water, and telecom in order to minimize the budget deficit. This would encourage investments, reduce the demand for dollars, and alleviate the pressure on the banking sector.
|
|
|
|
Reputation of Banks Would be Greatly Damaged if Haircut Enacted
December 27, 2019- New Lebanon Online Magazine, Beirut, Lebanon
The current Lebanese currency crisis began with people rushing to withdraw their money from banks. This forced banks in turn to limit withdrawals as a sort of unofficial capital control. Dr. Mardini expressed his concern stating that these measures would lessen the banks’ ability to attract external inflows of capital, especially with the current shortage of dollars. He also cautioned that implementing a haircut on government bond holders would greatly reduce Lebanese banks’ assets since they hold $31 billion of the government’s debt, while the central bank holds $40 billion, amounting to a total of 83% of public debt.
Click Here to Read the Article in Arabic |
|
|
|
|
Modifying Lebanon’s Monetary Policy Broke the Peg
December 28, 2019- VDL Radio Station, Beirut, Lebanon
After the meeting of the Finance and Budget Committee, the central bank governor stated that the exchange rate will remain stable at 1530 LBP to the dollar, while people in the market have dealt with an unofficial rate of 2500 LBP. Dr. Mardini criticized the uncertainty of having two exchange rates and projected that it will increase people's panic and fuel the crisis. The central bank must anchor expectation and show a credible commitment to maintaining financial stability especially that political authorities are in a coma. He explained that the real reason behind the current crisis is the central bank changing its mandate from pegging the exchange rate into funding the fiscal deficit. The central bank should refocus on stabilizing the exchange rate rather than financing government spending in order to restore confidence in the financial system.
Click Here to Listen to the Interview in Arabic |
|
|
|
Which Structural Reforms Does Lebanon Need to Function Properly?
|
|
|
|
Guiding Discussions for Lebanon’s Economic Future
December 5, 2019- Atlas Network, United States
LIMS’ work in Lebanon was acknowledged in an article by the Atlas Network. The article discussed government spending, taxation, and the size of government that are large enough to have a measurable impact on Lebanon currently ranked 75 out of 162 countries, according to the Fraser Institute’s Economic Freedom of the World Index. In November, LIMS held Lebanon’s Freedom Audit in partnership with the Fraser Institute and the Atlas Network to introduce practical policy reform ideas to the 326 protestors, activists, experts, academics, and selected policymakers engaged in the audit. Ms. Mardini stated that liberating Lebanon’s economy from the government is the answer to the country’s current problems.
Click Here to Read the Article in English |
|
|
|
|
Lebanese People Suffer Due to the Huge Public Deficit
December 20, 2019- Sharq Awsat TV, Turkey
While the nominated Prime Minister Hassan Diab is trying to form a cabinet in consultation with different political parties, protesters are in the streets demanding the appointment of technocratic and independent ministers. Dr. Mardini insisted that the economic reform agenda of Mr. Diab should be announced clearly in advance and the nomination of the cabinet members should be based on their willingness to perform those reforms. He explained that government should decrease spending from $18 billion to $11 billion, in order to eliminate the fiscal deficit, which means cutting the number of public sector employees in half and decreasing the salaries of the remaining. Cabinet members should be willing to accept this responsibility before accepting their nomination. He gave the examples of Great Britain and Ireland who went through similar crises, dared to perform the harsh reforms, and succeeded in securing a better future for their populations.
Click Here to Watch the Interview in Arabic |
|
|
|
|
Lebanon Requires Unpopular Reforms to Overcome Crisis
December 26, 2019- Machakel w Houloul, Télé Liban, Beirut, Lebanon
In 2019, many businesses closed, many Lebanese became unemployed, and many more are being paid half their salaries while inflation increased by 40%. In his interview, Dr. Mardini cautioned that the economy will shrink three times more in 2020. The government is relying on borrowing depositor’s money and imposing taxes to cover its deficit, crowding out productive businesses. He explained that allowing private companies into water, electricity, and telecom projects would relieve the government from much of its expenses, while simultaneously stimulating the economy. He also argued for downsizing government through laying off half of public sector employees and decreasing the salaries of the remaining half. He projected that these unpopular reforms, if implemented, might get the country out of the current crisis in 3-4 years, while the alternative would be a long depression for a decade or more. He also proposed a full dollarization of the economy or the creation of a currency board in order to discipline monetary policy.
Click Here to Watch the Interview in Arabic |
|
|
|
|
Government’s Gasoline Tender Allows for Favoritism
December 3, 2019- Annahar Newspaper, Beirut, Lebanon
The Ministry of Energy and Water decided to buy gasoline on behalf of the public under the pretext of dismantling the oil cartel amidst the increase in the price of fuel in Lebanon. Dr. Mardini criticized the media campaigns that supported the government’s increased intervention in this sector. He explained that the ministry refrained from going through the scrutiny of the tender department when executing the purchase. Such decision allowed a bias tender with the following flaws: (1) giving the ministry the discretionary ability to repeal the bid of a winning company, to postpone or cancel the tender if it doesn’t like the outcome, and to change the tendering conditions for no reason, (2) denying the right of objection to losing companies, and (3) restricting the tender to local oil importers, which empties the claim of dismantling the so-called “oil cartel” of its substance.
Click Here to Read the Article in Arabic |
|
|
|
6th Regional Conference on Civil Society in Middle East and North Africa
December 6-8, 2019, Carthage Thallaso Hotel, Gammarth, Tunisia
45 experts, academics, and civil society activists from 9 MENA countries attended the 3-day workshop organized by the Project on Middle East Democracy (POMED) on public policy writing. LIMS’ Programs Manager Ms. Eliane Badawy cooperated with other participants and learned about drafting policies from identifying the problems, to building alternatives, applying the policies, to following up and assessing them.
Click Here to View Photos |
|
|
|
|
|
|
|
|
