Dr.. Louis Hobeika *
Is it possible to implement serious reforms in Lebanon? What is required by the International Monetary Fund is to restructure the financial sector, not just the banking sector. You must respect the integrity of deposits in full and bear the losses from taking the bad decisions that got us to where we are. The Lebanese public sector is very rich, and it can pay back the losses it caused, through its chronic policies. The financing of banks by the following external funds, can return deposits to their owners and allow them to play their natural role as financiers for the private sector.
Financial reforms are required nationally, and this is what all successive governments have failed to do. Here lies the importance of any future elections, to allow public opinion to put pressure on the political class. What is required in practice is to stop corruption, reduce the size of the public sector, rationalize spending and collect revenues from taxes, fees, and others. Rationalizing spending does not only mean reducing numbers, but rather distributing it in a better way to protect social and health needs, and modernize and equip infrastructure.
Have we lost hope in reforming public institutions? We want to address the feasibility, quality and cost of their services. Do we hope to reform the Electricité du Liban? Why not cooperate more with the private sector, so we shorten the time and reduce losses? The same applies to other public institutions. Let us deal with the facts more seriously, and let the private sector enter into them through the PPP system that was previously approved.
Governance must be strengthened and corruption must be fought. Hence the need to carry out the necessary criminal, financial, administrative and other oversight. It is unacceptable for the Banque du Liban to continue as it is, that is, a box closed to public opinion. It is unacceptable for the Banque du Liban to own institutions and companies that have nothing to do with the monetary and banking mission, and therefore it must be reduced in size in order to focus on monetary authority and financial and banking control. It is unacceptable for the Banque du Liban to be a republic within a republic, and the best example for us are the American, European and Japanese central banks.
We want to put in place a realistic exchange rate regime, as the rigid constant contributed to bringing us into the deep crisis. With the money entering Lebanon, we must adopt a free exchange rate policy that is monitored by the Banque du Liban, just as it happens in mature developed markets, that is, the dollar, the euro, and the yen.
All of these reforms are logical and possible, and they must be discussed internally in order to ensure our capabilities to implement them. Normal banking secrecy must be preserved, i.e. that does not protect criminals and those who disturb security and stability. Maintaining banking secrecy aims to protect the honest and honorable citizen, company and institution, i.e. the overwhelming majority.
In order for our institutions, i.e. the House of Representatives and the Council of Ministers, to succeed in its exceptional reform mission with future presidential support, conviction must be present. The challenges are great, and whoever is unable to bear them should give the position to someone else. The main difficulty is the time factor, but that may be a motive for doing what we must do. With all these reforms, we will build a new economy for the future.
* Lebanese economist and academic
