BEIRUT – Lebanon is looking to secure $4 billion to $5 billion in soft loans from international donors to finance purchases of wheat, fuel and medicines, Lebanese newspaper The Daily Star cited Finance Minister Ghazi Wazni as saying on Thursday.
A new Lebanese government that took office on Tuesday must grapple with an unprecedented financial crisis, Banks have imposed controls on withdrawals and transfers and the Lebanese pound has sunk against the dollar.
“We will ask the international donors to provide Lebanon with $4 billion to $5 billion in soft loans to finance the purchasing of wheat, fuel oil and pharmaceuticals,” said Wazni.
“This injection will cover the country’s needs for one year,” he added.
The government was set up with backing from the powerful Iran-backed group Hezbollah and its political allies. Former prime minister Saad al-Hariri, a traditional ally of the West and Gulf Arab states, and his party are not part of the cabinet.
Wazni was picked by Parliament Speaker Nabih Berri.
Analysts believe the influence of Hezbollah over the cabinet may complicate its bid to secure foreign funding, particularly from Gulf Arab states that have provided aid in the past but see Hezbollah as a threat.
Foreign governments and institutions have consistently demanded Lebanon enact long-delayed reforms to curb state waste and corruption before any new financial support is released to the heavily indebted Beirut government.
U.S. Secretary of State Mike Pompeo said on Wednesday only a Lebanese government “capable and committed to undertaking real and tangible reforms will restore investor confidence and unlock international assistance.”
Speaking at Davos on Thursday, U.S. Treasury Secretary Steve Mnuchin said: “We’re monitoring carefully and speaking with the government about various different economic alternatives”.
Prime Minister Hassan Diab was set to meet several foreign ambassadors on Thursday as the country looks to rally support. It must decide on how to deal with maturing Eurobonds, including a $1.2 billion bond due in March.
Lebanon won pledges exceeding $11 billion for a program of infrastructure investment at an international conference in 2018, conditional on reforms that the previous government failed to implement.