Lebanon top finance official resigns citing bad crisis management
Resignation seen as a big blow to confidence in the state’s ability to navigate through its worst-ever financial crisis.
Beirut, Lebanon – The longtime director of Lebanon’s finance ministry, Alain Bifani, has resigned citing “forces of darkness and injustice” working to sabotage a sustainable recovery from the country’s deep financial crisis, which he says could potentially impoverish millions.
“There is very little time left. I decided to resign because I refuse to be a partner or a witness to what is happening,” Bifani said at a news conference in Beirut on Monday.
If current trends persisted, he said, “five million Lebanese could be taken back years and years”, and the country would sink into a “whirlpool of unemployment and poverty”.
The civil servant of 20 years was the main architect of a government rescue plan that formed the basis of negotiations for an aid programme from the International Monetary Fund (IMF). Lebanon is seeking some $10bn from the global lender to address a deep financial crisis that has its roots in decades of corruption and mismanagement.
The government’s plan called for a restructuring of the country’s large debt, as well as insolvent banks and its central bank.
It quickly came under intense fire from establishment politicians, private banks and parliamentarians who said it was far too aggressive in its estimation of losses in the financial system.
Bifani, who was a member of the government’s IMF negotiating team, defended the numbers in his resignation speech on Monday. He said the country’s “political-financial” establishment realised they would have to bear a large portion of the losses, and so conspired to “distort” the plan with “baseless” claims that it would slice away at the average person’s deposits.
“When they saw the numbers and realized they would have to contribute, the campaigns started,” he said. They centred on attempts to scare people over a “haircut” – or loss in overall value – of their deposits.
Banks have imposed informal capital controls on savers since November amid an acute dollar shortage.
Bifani said the plan would envision a contribution of about $3bn only from those with the biggest accounts above $10m, out of a total $61bn in estimated losses.
This would affect just 931 accounts out of 2.7 million in the state, he said.
He said the establishment was imposing an effective haircut on the average person by keeping their money stuck in the banking system while the currency rapidly depreciates. The Lebanese pound has lost more than 80 percent of its value against the US dollar since August.
“Our depositors face a haircut every day, not because the plan has been implemented but because it is not being implemented,” he said.
‘No more credibility’
Bifani’s resignation comes just 10 days after another member of the government’s IMF negotiating team, Henri Chaoul, resigned, citing a lack of political will “to implement either reforms or a restructuring of the banking sector, including the central bank”.
The resignations have cast serious doubt on the ability of Prime Minister Hassan Diab’s government to enact reforms after it gained confidence in February following a huge anti-establishment uprising.
Diab’s government is made up of new faces and a number of respected technocrats but was appointed by establishment sectarian parties representing Lebanon’s old guard.
“This resignation implies that this technocratic government no longer has any credibility because Bifani is a technocrat and he worked hard on the new economic plan and on the government numbers,” Jad Chaaban, associate professor of economics at the American University of Beirut, told Al Jazeera.
“Regardless of how and why he stayed in the state for 20 years, I think the resignation of a top technocrat in this crucial time … is a signal that the deep state of political parties and bank owners is winning and that they are not accepting any responsibility and participating in the economic recovery.”
Bifani indicated as much, saying the government’s plan was “born an orphan” – left open to attack from all sides with no one to defend it.
“From one side we say that we want an IMF programme and from the other side we do everything to foil attempts to change,” he said.
When contacted by Al Jazeera, the finance ministry and prime minister’s office declined to comment on Bifani’s resignation.
In a profile by French-language magazine Commerce Du Levant published on June 5, Bifani had indicated he had no plans to quit.
“I can hardly see myself leaving the ship in the middle of a storm,” he was quoted as saying.
But on Monday he said he had reached a “dead-end” and now believed it was better to resign and confront an establishment that has shown an inability to reform.
“We all need to take a stance,” he said at the end of the news conference. “I have taken it after I tried hard to work towards salvation.”