Minister Amin Salam addresses Lebanon’s economic crises

Minister Amin Salam addresses Lebanon’s economic crises

Lebanon is grappling with a deep financial crisis.

The United Nations estimates nearly 80 percent of its people live below the poverty line, while the World Bank has warned the economic calamity ranks as one of the three most severe the world has seen since the mid-19th century.

On Thursday, an armed man took hostages at a bank in Beirut to demand access to his savings, threatening to set himself on fire if the bank did not give him his money.

The country has imposed restrictions on how much cash people can take out as the economy worsens.

Al Jazeera discusses the economic and food crises with Lebanon’s Minister of Economy and Trade Amin Salam.

AJ: How would you characterise the state of the economy?

Salam: Lebanon is really going through a very, very difficult economic crisis. Reforms are a major need for Lebanon to be able to stop the bleeding in the economy and begin looking at development and recovery.

The delays due to political tensions within the country have extended the timeline for the quick reforms requested by the IMF [International Monetary Fund] and requested by the international community. Therefore, we are seeing more social unrest, which is very alarming because what we have witnessed yesterday could be something that could grow bigger and on a larger scale, which will create total chaos on the social scene with security challenges for Lebanon.

AJ: Well as you just alluded to there just yesterday, we saw that level of desperation that many people are feeling, when will people be able to get their money out of the banks?

Salam: This is a very tough question to answer, however, it’s a very justified question, and people have the full right to their deposits in the banks.

I’ve been a member of the negotiation committee with the IMF. We have been working diligently to find the best exits really to secure the monies of the depositors. None of the scenarios that we really worked on was an easy one.

Most recently, the government issued an economic recovery plan that showed certain accounts with a limit of $100,000 would be able to have access to their monies in the banks, and the amounts that are larger than $100,000 will be part of a larger economic plan, more sophisticated, that will have the government pay back those monies through an investment fund that the government looks forward to establish.

AJ: A question that a lot of Lebanese would like to know is when will that happen?

Salam: As we’ve been saying, Lebanon is in need of a bailout and the IMF wants reforms done before that happens. I am honestly very concerned that the delay in the reforms that were requested in the form of prerequisites by the IMF are taking too long. Most of those laws are in the parliament, waiting for the parliament to issue them.

Once we issue those reform laws, including the capital control that really puts a structure to the whole banking sector, once we issue the restructuring of the banking sector, the secrecy law for the banking sector, and the budget 2022, then we can really start talking about serious next steps of opening up more the banks, dealing with the depositors, giving hope that depositors can begin having access based on new laws that are out.

Before that, nothing will really change, which is the biggest concern. Unless those reform laws are out, nothing will change on the social scene or the way the depositors can access their money.

AJ: Well, in the meantime, there are these widespread shortages of food and fuel and people are suffering, and it does sound that what you just discussed there will take time. A committee that I believe you chair declared recently that 90 percent of the bread crisis is over.

Are you now confident that subsidised grain is ending up where it’s supposed to go, that it’s benefitting the people it’s supposed to?

Salam: For us the food security issue, and I do have the food security ministerial committee, we have really put exceptional new mechanisms to really manage the proper distribution of subsidised wheat into the market.

Within less than a week we have witnessed 100 percent almost change in the market because the crisis is over. There are no more lines in front of the bakeries, and the distribution is being fair for all the areas in Lebanon.

However, we do still have lots of challenges that we need to deal with, particularly smuggling subsidised wheat outside of the country and dealing with a number of black-market traders that this committee is chasing really relentlessly and turning them into the judiciary system and taking extreme measures against them to be able to really control the market for more stability.

But we are confident that the crisis is over, and we will continue the same efforts to really secure that the bread and the people that really need access to this bread are getting their share.

AJ: Lebanon was getting something like 70 percent of its imported grain from Ukraine. How has the war there changed things? I see that the first grain-carrying ship that was on its way hasn’t arrived.

Salam: Yes, that is true. Lebanon imports about 70 percent of its wheat from Ukraine, the rest is spread among multiple countries. But for us, the war in Ukraine really impacted our availability for this commodity because Lebanon, as you know very well, lost its national reserves after the tragic explosion in the port of Beirut, so we really consume what we get delivered.

And the delays that happened due to the war in Ukraine and Russia were significant because we used to receive any shipment coming from Ukraine within a week to Lebanon. Now it was taking over three weeks, sometimes to a month, and sometimes some of the ships were being transferred to other locations.

We are happy that the Istanbul agreement now has opened up back the shipment lanes from Ukraine to Lebanon. And the ship that you just mentioned mostly had different types of grains, mostly corn, not wheat.

That was supposed to arrive to Lebanon, but from the official channels, we were informed that it changed its destination because it took so long to arrive to Lebanon and the private sector who purchased this ship cancelled the whole deal. That’s the information we received.

AJ: You have several months left in your own term and, as we’ve discussed, a lot of things are going to take quite a lot of time. A huge amount here rests on the trust of people in politicians. What are you personally going to get done in the rest of your term?

Salam: My biggest concern and the mission that I’m really focused on now, particularly that Lebanon has been categorised by the World Bank and a number of international organisations to be the most vulnerable, is the food security issue.

First of all, we will continue the stability in getting supplies, particularly wheat, to Lebanon, which is a very serious component of the food security issue in Lebanon.

The second most important thing to accomplish is the ministry of economy and trade needs to keep all the channels open with the international community to secure their support and their aid to Lebanon continues to come and arrive to Lebanon smoothly.

The last most important thing is our monitoring role to make sure that everything arrives and is priced in a legal structure so the citizens of Lebanon do not get abused by unfair traders or black-market traders because the inflation is already impacting Lebanon at large.