Lebanon’s new government won a confidence vote in parliament with 95 lawmakers backing Prime Minister Nawaf Salam, who promised economic reforms and IMF negotiations. Hezbollah’s support marks a change in political dynamics following setbacks in their power. The country faces a severe economic crisis since 2019, lacking necessary reforms to access international funding.
Lebanon’s newly appointed government secured a confidence vote in parliament, gaining the support of 95 out of 128 lawmakers. Prime Minister Nawaf Salam addressed the assembly, emphasizing the need for economic reforms and initiating negotiations with the International Monetary Fund (IMF). This confidence from members marks a crucial step for the government amid the country’s ongoing economic crisis.
The backing from Hezbollah, a historically significant political entity in Lebanon, was manifested through a speech by senior member Mohammed Raad, showcasing a shift in Lebanon’s political dynamics. The government’s policy statement notably omitted previous language legitimizing Hezbollah’s role in national defense, reflecting a changing landscape especially after Hezbollah’s recent setbacks.
Salam assured that the government’s priorities included moving Lebanon off the grey list of financial accountability and ensuring that depositors’ concerns were addressed. Lebanon has faced severe economic challenges since 2019, leading to a collapse of its financial system and a sovereign default in 2020, which left many depositors unable to access their savings.
The formation of the new government on February 8 occurred following direct U.S. involvement, marking an effort to unlock reconstruction funding after the conflict between Israel and Hezbollah. Finance Minister Yassine Jaber mentioned the expectation of an IMF mission visiting Lebanon as early as March, underscoring the urgency of reforms requested by the IMF prior to funding disbursement.
In 2022, Lebanon and the IMF had drafted a funding agreement that was never finalized due to the government’s failure to implement necessary reforms, which remain critical for the nation’s recovery from its dire economic situation.
Lebanon’s new government has taken significant steps to restore confidence among legislators by securing a crucial vote in parliament, while also prioritizing economic reforms and negotiations with the IMF. Hezbollah’s unusual backing signifies a transformation in the political arena, as the government focuses on stabilizing the economy and addressing the financial struggles of its citizens. The upcoming IMF engagement highlights the urgency of implementing needed reforms to facilitate access to vital international funding.
Original Source: www.marketscreener.com
