Lebanon's government approves sweeping reforms amid protests

BEIRUT (AP) - Lebanon's Cabinet approved a package of economic reforms and a 2020 budget with no new taxes on Monday, hoping to appease the thousands of protesters that have taken to the streets for the last five days to demand the government step down.

Prime Minister Saad Hariri described the measures as a "financial coup," saying no government in Lebanon's history has taken such steps before.

As Hariri's speech was aired live on all local TV stations, thousands of protesters who had gathered in central Beirut chanted: "The people want to bring down the regime." The number of protesters swelled following the Cabinet announcement, amid intense skepticism the reforms amounted to anything serious.

The reform package was announced in response to massive nationwide protests that began Thursday and have turned into a widening revolt against the country's sectarian status quo and the entire political elite. The outrage over the government's mismanagement of a deepening economic crisis and proposed new taxes has unified Lebanon's often fractious society.

Hariri had given his government - an unwieldy national coalition of nine largely sectarian parties - a deadline that expires Monday evening to come up with convincing solutions to the economic crisis.

After a nearly five-hour emergency government meeting, Hariri told reporters that the Cabinet approved the 2020 budget with a deficit of 0.6 percent with no new taxes. The reforms include cutting the salaries of top officials including ministers and members of parliament by half, scrapping the ministry of information and other public institutions and downsizing others as part of cost-cutting measures.

"The decisions that we made today might not fulfil your goals but for sure it achieves what I have been seeking for two years," Hariri said. "These decisions are not for exchange. I am not going to ask you to stop protesting and stop expressing your anger. This is a decision that you take."

"Frankly speaking, your protest is what made us to take these decisions that you witnessed today," Hariri said. He added that "what you did 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 billion in 2020.

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 that stands at 150% 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.

The government will also distribute millions of dollars to families living in poverty and will also give $160 million as housing loans in an attempt to try revive the struggling construction sector.

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

Later Monday, President Michel Aoun signed the budget, which will be sent to parliament for discussion and approval.

Earlier, protesters closed major roads around Lebanon ahead of the emergency Cabinet meeting.

Demonstrators placed barriers across major intersections in Beirut as well as other cities and towns across the country. Schools, universities, banks and government institutions remain shuttered as the country is gripped by the largest protests since the so-called Cedar Revolution in 2005.

Amid the unrest, Lebanese troops were deployed on the main road to the palace to clear the way for Hariri and government ministers to reach Baabda.

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.

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.

"I am with the reforms. I am against the destruction of Lebanon," said Rabih Zghaib a protester in Beirut. "Lebanon has been badly damaged by the politicians for 30 years. Today their thrones are shaking."

In Tehran, Iranian Foreign Minister Mohammad Javad Zarif expressed hope that Lebanon's government and political parties pay "attention to people's demands," the semi-official Fars news agency reported.

It was the first remarks by an Iranian official about the protests in Lebanon.

Iran enjoys wide influence in Lebanon through the militant Hezbollah organization, which is armed and funded by Tehran. Hezbollah and its allies have a majority of seats in Lebanon's parliament and Cabinet.

In 2005, Lebanon witnessed protests and a mass uprising against Syria's occupation of the country, after Damascus was blamed for the assassination of Prime Minister Rafik Hariri in a large car bomb.

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Associated Press writers Fadi Tawil in Beirut and Nasser Karimi in Tehran, Iran, contributed to this report.