July 23, 2020 / 7:20 AM / 21 days ago

French foreign minister starts Lebanon visit, to urge reform

BEIRUT, July 23 (Reuters) - French Foreign Minister Jean-Yves Le Drian is expected to urge Lebanon to enact badly-needed reforms to help get the country out of an acute financial crisis during a visit to Beirut which started on Thursday with a meeting with President Michel Aoun.

The financial crisis, rooted in decades of state corruption and waste, marks the biggest threat to Lebanon’s stability since the 1975-90 civil war. A collapsing currency has led to soaring inflation and poverty and savers have lost free access to their accounts in a paralysed banking system.

France has led international efforts to get Lebanon to reform, hosting a donor meeting in 2018 when more than $11 billion was pledged for infrastructure investment contingent on reforms which were promised but not delivered.

Lebanon began talks with the International Monetary Fund (IMF) in May but these have been put on hold in the absence of reforms and as differences arose between the government, the banking sector and politicians over the scale of vast financial losses in the system.

The Lebanese presidency said Aoun met Le Drian, who is due to deliver a news conference at the foreign ministry later on Thursday.

One of the many areas where donors want to see progress is fixing the wasteful state-owned electricity grid, which bleeds up to $2 billion a year in public funds while failing to meet the country’s power needs.

Lebanon, with one of the highest public debt burdens in the world, defaulted on its foreign currency sovereign debt in March, citing critically low foreign reserves. The Lebanese pound has lost some 80% of its value since October. (Writing by Tom Perry, Editing by William Maclean)

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