By James @ Frontier Markets
As Lebanon’s woes continue to engulf the country, a new prime minister, the relatively unknown 48-year-old Mustapha Adib, has been granted with the misison of dragging the Middle Eastern nation out of its current turmoil. But what exactly does he need to do and what is the size of the task at hand?
One of the first things that Adib needs to tackle is to win back the confidence of the Lebanese population who have been striking for almost a year. The country’s socioeconomic situation has deteriorated rapidly of the last few year as poverty has sharply increased (almost half of the population lives below the poverty line) and unemployment continues to remain relatively high. There is also anger and discontent both domestically and internationally towards the handling of the Beirut Port Explosion last month which killed over 200 people, wounded 6,000 others and eventually culminated in Hassan Diab’s resignation. The new Prime Minister will also need to assemble a cabinet that will instil confidence in the general public, but this may prove to be a difficult task as he will face pressure from various lobbyist and political groups.
Financially, Lebanon is in a dark place. Debt continues to soar, the currency is weakening significantly against the dollar in the parallel market and hyperinflationary pressures persist as the inflation rate recently jumped to over 100% in July. Domestically, Adib will need to effectively manage government policy and provide monetary and fiscal support in order to provide the economy with a jump start or at least a push in the right direction in order to boost confidence. Not only will poverty need to be addressed, but the growing income gap (difference between the richest and poorest) will provide another headache when it comes to policy.
Lebanon’s international position also looks weak. Constant back-and-forth negotiations between the previous administration, the banks and the International Monetary Fund (IMF) have led to growing dissatisfaction across all the parties involved in the process and resignations from the negotiation team. Adib will need to approach the negotiations with much more of an open mind than his predecessors but will need to be wary about looking “desperate” for a deal. French President Emmanuel Macron, partially reassured by Adib’s “low-key background”, has already indicated that he will lend a hand but wants to see significant improvements in the political operation of the country.
While there are many other issues that Adib will need to tackle, the aforementioned points are the main sticking points and his legacy, if any, will be dictated by how he approaches and handles each one.