In limbo as crisis rages, Lebanese banks remain shut
Lebanon's banks will remain closed for a fifth working day amid uncertainty over how Prime Minister Saad al-Hariri plans to extract billions of dollars from the financial sector to help ease an economic crisis that has ignited national protests.
A day after Hariri unveiled a set of measures aimed partly at addressing protester demands, people poured into the streets once again on Tuesday, sustaining the historic wave of dissent against politicians blamed for leading Lebanon into crisis.
A source close to Hariri, who heads a cabinet grouping all Lebanon's main parties, denied rumours on social media that he was resigning.
The moves he announced on Monday included the symbolic halving of the salaries of ministers and lawmakers, as well as steps toward implementing long-delayed measures vital to fixing the finances of the heavily indebted state.
Under pressure to convince foreign donors he can slash next year's budget deficit, Hariri has said the central bank and commercial banks would contribute 5.1 trillion Lebanese pounds ($3.4 billion) to help plug the gap, including through an increase in taxes on bank profits.
Five bankers interviewed by journalists said details of the measures had not been explained to them and they were awaiting the return of central bank governor Riad Salameh from Washington, where he has been attending IMF and World Bank meetings, to shed light. They all requested anonymity given the sensitivity of the situation.
Lebanese government officials could not immediately be reached for comment.
In the meantime, banks will remain shut on Wednesday, "waiting for the general situation to stabilise in the country", the Association of Banks in Lebanon (AbL) said in a statement on Tuesday. It did not say when the lenders might re -open and did not respond to a request for further comment.
Four of the bankers said it made sense to keep branches closed while there was concern among savers about whether reforms would restore confidence.
"All the banks are saying the same thing to each other. So we are thinking we need to postpone (reopening) until we take measures, all of us. We are waiting for the governor to say what we have to do," one of the bankers said.
Syrian refugee children in Lebanon
The civil war in Syria means that there are many traumatised and vulnerable Syrian children living as refugees in Lebanon. For them, the few makeshift schools set up to educate them are often the only semblance of normality in their disrupted and difficult lives. Many, however, are not even lucky enough to attend school. Photos by Amy Leang.
Therapy: Syrian refugee children sing a song at the Karam Zeitoun School in Beirut. Creative activities are therapeutic for the children. "They hear the stories of their parents. They talk about the war, about having no money. When they go to school, they can be themselves. They can be children," says Charlotte Bertal, co-founder of a French NGO that runs the school.
'A second life': a pupil turns the pages of her English-language exercise book at the Karam Zeitoun School in Beirut. The long-term goal is to prepare children for Lebanese public schools – if financially and logistically possible. "It's a second life," says 14-year-old Susanne, who wants to be an artist when she grows up. "Without school, my life would be nothing."
Number-crunching: Diana, 11, tries to keep up with a maths lesson at the Karam Zeitoun School in Beirut. "In general, the difficulties that the students face are that the families can't support or teach them at home. They only learn at school," says their teacher Nasser Al-Issa, who is himself a refugee.
Filling empty tummies: children eat lentils in the courtyard of the Karam Zeitoun School in Beirut. "One room in this neighbourhood costs €300–400 to rent," says Rev. Andrew Salameh of the Nazarene Church. In partnership with the NGO, Yalla! Pour Les Enfants in Syria, his Church runs the non-religious, non-politically affiliated school. "If you're paying that much rent, you have no more money for food."
Apartment buildings are reflected in a classroom window at the Karam Zeitoun School in Beirut. "The families live in the neighbourhood," says Rev. Andrew Salameh. "Some rooms are under stairs or on roofs."
Creative writing: Ashta, 12, looks out the window during a creative writing exercise at the Karam Zeitoun School in Beirut. "Writing workshops and creative activities allow us to assess the psychological needs of the students and refer the child to a specialist if necessary," said Charlotte Bertal, co-founder of Yalla Pour Les Enfants in Syria.
A lost generation? Syrian parents help their children with their maths homework in their rented room in Beirut. "I brought them here because I was afraid they would never learn. I want them to be educated," says their father, who was a farmer in Syria and now does odd jobs in Beirut. "It's a big mistake. If they don't find a solution, this generation will be lost."
Killing time: Syrian-Armenian refugee Simon, 3, plays in the tiny flat he shares with 10 other family members in Beirut. Refugee children who do not attend school or supplemental educational activities often spend all day at home watching television or playing. "There are 400,000 children," says Charlotte Bertal, "but only 90,000 are going to school. It's a huge problem the UN and NGOs have to address."
School of hard knocks: Mohammed and Ahmed try to make money polishing shoes. They haven't been in school since 2011. "Of course, we miss school," said Ahmed. "At the school here, they told us if we registered as refugees, they will accept us. But my father has an illness and has to go to Syria to treat it. If he registers, he might be caught by the regime (at the border). That's why we can't go to school."
Street life: Nariman, 7, tries to sell packets of tissues to customers at the entrance to a restaurant in Beirut. Nariman was in second grade in Syria before fleeing with her family to Beirut. She gets the packets from her uncle and has to earn 12,000 Lebanese pounds (roughly €6) every day by 6 pm. She spends most of the day unsupervised on the street.
Hard to concentrate: a young child daydreaming during class at a school recently set up by the non-governmental organisation SAWA for Development & Aid near the Syrian border in Bar Elias, Lebanon. "The children have gone through so much fear and so much stress that they don't care anymore," says teacher Shams Ibrahim, herself a refugee from Damascus. "They've broken the fear barrier."
A central bank source said the shuttering was a practical response to street protests. Roadblocks have made it difficult for bank employees to get to work, the source said.
Analysts at Bank Audi said the government's plans would involve the central bank contributing 4.5 trillion Lebanese pounds ($2.99 billion) to halve Lebanon's debt servicing costs and the imposition of an exceptional income tax for one year on Lebanese banks to raise a further 600 billion.
Other emergency measures, including reforms to fight corruption and waste, have so far failed to revive investor confidence seen as critical to steering Lebanon away from a financial meltdown. Lebanese bonds slumped on Monday.
In a statement on Tuesday, the French government urged Beirut to carry out the reforms, which are key to unlocking some $11 billion in financing pledged by France and other countries and lending institutions last year.
"France stands alongside Lebanon. It is in this perspective that we are committed, with our international partners, to the rapid implementation of the decisions taken at the CEDRE conference in Paris in April 2018."
A second banker said foreign states should now help with moves to support Lebanon. "You need a stability plan from the international community to answer the fear of the people to be able to stabilise the situation," he said.
Hariri's senior adviser Nadim Munla said he expects foreign donors to react positively to the reforms, which he said show Lebanon was serious about cutting its budget deficit.
Lebanon's banking sector has been a major lender to the government with deposits sent from its diaspora a critical source of financing for the state and the import-dependent economy.
But capital inflows have been slowing for a number of years. This strain has surfaced in the real economy of late where dollars have been harder to obtain at the official exchange rate and the Lebanese pound has weakened on a parallel market.
Banks voiced criticism earlier this year when the government raised the tax on interest as part of efforts to reduce the deficit in the 2019 deficit.
Garbis Iradian, chief MENA economist, Institute of International Finance, said "most of the adjustment burden is falling on the banking system in Lebanon."
"The banks may cope but their profitability, if any, will be adversely impacted. I think the banks are overburdened with taxes and they're the ones who are contributing the most to the increase in tax revenues." (Reuters)