Lebanon’s Cabinet approved sweeping reforms 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 Mr 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.”
Hundreds of thousands participated in marches on Sunday in Beirut and other cities nationwide.
The massive protests 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.
Mr Hariri had given his government — an unwieldy national coalition of nine largely sectarian parties — a deadline that expires on Monday evening to come up with convincing solutions to the economic crisis.
After a nearly five-hour emergency government meeting, Mr Hariri told reporters the Cabinet approved the 2020 budget with a deficit of 0.6% with no new taxes.
“The decisions that we made today might not fulfil your goals but for sure it achieves what I have been seeking for two years,” Mr 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. What you did has broken all barriers and shook all political parties.”
Mr Hariri said that the salaries of top officials, including legislators and members of parliament, will be cut in half as part of an economic reform package.
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 £2.6 billion in 2020.
The banking sector was criticised by many of the protesters, who blamed it for charging the state high interest rates as it carries much of the £65 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 Mr Hariri said taxes will be increased on financial institutions.
The Cabinet also approved abolishing several state institutions including the Ministry of Information and cutting the budget of other state agencies such as the one in charge of development and construction by 70%.
The government will also distribute millions of pounds to families living in poverty and will also give £123 million as housing loans in an attempt to try revive the struggling construction sector.
Mr Hariri said that a law will be drafted to restore money that were usurped as a result of widespread corruption in the country.
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.