Lebanon announces sweeping economic reforms after days of protests

Lebanon's government has approved sweeping reforms that it hopes will appease hundreds of thousands of people who have been protesting for days, calling on Prime Minister Saad al-Hariri's government to resign.

Hariri told reporters after an emergency government meeting Monday that the Lebanese cabinet approved the 2020 budget with a deficit of 0.6 per centwith no new taxes.

He said that the salaries of top officials, including legislators and members of Parliament, will be cut in half as part of an economic reform package. Hariri added that the country's central bank and the banking sector, which are flush with cash, will help in reducing the deficit by about $3.4 billion US.

The cabinet also approved abolishing several state institutions, including the Ministry of Information.

The government will also give millions of dollars to families living in poverty as well as $160 million as housing loans in an attempt to revive the struggling construction sector.Hariri described the measures as a "financial coup," saying no government in Lebanon's history has taken such radical steps before.

"The decisions that we made today might not fulfil your goals, but for certain it achieves what I have been seeking for two years," Hariri told protesters in a speech at the presidential palace.

"These decisions are not in exchange for anything. I am not going to ask you to stop protesting and stop expressing your anger. This is a decision that you take," he added.

Despite Hariri's reform announcement,many protesters say they don't trust any plan by the current government. They've called on the 30-member cabinet to resign and be replaced by a smaller one made up of technocrats instead of members of political factions.

On Monday morning, prior to theemergency cabinet meeting where the economic rescue plan for thecountry's crumbling economy was announced, thousands of protesters closed major roads around Lebanon

Demonstrators placed barriers on major intersections in Beirut as well as other cities and towns, marking the fifth day of protests triggered by proposed new taxes.

The number of protesters swelled in cities like Beirut and Sidon following the announcement amid intense skepticism that the reforms amounted to anything serious. The demonstratorsincluded many young men and women as well as whole familieswith children.

Layan Ajineh, who came to the protest inBeirut with her two sons, ages 16 and 12, said politicians "have not been able to adopt reforms in 30 years, so how did they come up with them in three days?"

"This is a joke. Do they think we are fools?" said the 40-year-old housewife, who is worried about her sons' future in a country where unemployment stands at more than 30 per cent.

"The people want the government to resign. People see that this government cannot be given another chance," she said.

The protests have paralyzed the country for five days, with schools, universities, banks and other business shuttered. The protests are building on long-simmering anger at a ruling class that has divvied up power among themselves and amassed wealth for decades but has done little to fix a crumbling economy and dilapidated infrastructure.

Hundreds of thousands participated in Sunday's mass protests that were the largest since 2005.

It was not clear how the situation on the streets would move forward, especially when the main political parties have all taken the position that the government should not resign. Those include the powerful Iran-backed Hezbollah, President Michel Aoun's Free Patriotic Movement, Hariri's Future Movement and Parliament Speaker Nabih Berri's Amal group.

In Lebanon, the president is a Maronite Christian, the Parliament Speaker a Shia Muslim, while the prime minister is a Sunni. Cabinet and parliamentary seats are equally divided between Christians and Muslims.

Protests 'shook all political parties'

Hariri praised the protesters, saying: "What you've done has broken all barriers and shook all political parties."

He added that the country's central bank and the banking sector, which are flush with cash, will help in reducing the deficit by about $3.4 billionin 2020. The government will also study the privatization of the telecomsector.

The banking sector was criticized by many of the protesters, who blamed it for charging the state high interest rates as it carries much of the $85-billion public debt, whichstands at 150 per cent of the gross domestic product. Some senior politicians are either owners or major shareholders in private banks, and Hariri said taxes will be increased on financial institutions.

Hariri said a law will be drafted to restore money that was usurped as a result of widespread corruption in the country.