Lebanon's international backers say 'unsustainable' status quo is paralysing state

BEIRUT (Reuters) - Lebanon's ongoing presidential vacuum is cause for grave concern, the country's international backers said on Thursday, describing the current political situation as "unsustainable."

Lebanon is in an unprecedented crisis, with no president since Michel Aoun's term ended on Oct. 31, parliament struggling to pass laws and a caretaker cabinet with restricted powers.

The country is facing a crippling economic meltdown that has cost the local currency more than 98% of its value since 2019.

The International Support Group for Lebanon (ISG), which includes the United Nations, European Union, Arab League and more than a half-dozen countries including the United States and France, said Thursday it was "gravely concerned about the ramifications of a prolonged presidential vacuum".

It said "the status quo is unsustainable" and was "paralyzing the state at all levels," hampering its ability to address the economic crisis.

The ISG pointed out that Lebanon was "yet to conclude a financial program" and urged leaders to harmonize exchange rates and quickly adopt the laws required to restore confidence.

Lebanon's central bank on Wednesday said it would sell U.S. dollars at a rate of 70,000 pounds per greenback but the official exchange rate - re-valued on Feb. 1 - was still 15,000.

Unifying the multiple exchange rates is one of several preconditions set by the International Monetary Fund for Lebanon to clinch a $3 billion aid package.

But the IMF said last year progress in implementing reforms remained "very slow", with the bulk yet to be carried out despite the gravity of a crisis marking Lebanon's most destabilising phase since the 1975-90 civil war.

The ISG said it was "concerned" by the lack of progress in Lebanon's probe into the deadly 2020 blast at the Beirut port, caused by dangerous chemicals stored there for years.

The judge investigating the explosion tried to resume his work in January after a more than year-long suspension due to high-level political interference. However, the court system has been ordered not to process his decisions, which include charges against top current and former officials.

Politicians retain significant influence over judges' appointments and prerogatives in Lebanon, where commercial banks also have sway.

(Reporting by Maya Gebeily; Editing by Raissa Kasolowsky)