Lebanon hopes for new staff-level agreement with IMF
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FILE PHOTO: A view of the International Monetary Fund (IMF) logo at its headquarters in Washington, D.C., U.S., November 24, 2024. REUTERS/Benoit Tessier/File Photo
BEIRUT, Sept 28 - Lebanon hopes for a new staff-level agreement with the International Monetary Fund, Finance Minister Yassine Jaber has said, adding that a full IMF program still required Beirut to pass a final law to address losses from its financial crisis.
Lebanon first signed a staff-level agreement with the IMF in April 2022, more than two years after its financial system imploded following decades of profligate spending and corruption in the ruling elite. But it was slow to implement the promised changes.
The current government has fast-tracked reforms, including a bank restructuring law that was welcomed by the IMF in August.
Jaber was in Washington on Monday to meet with IMF Managing Director Kristalina Georgieva. In comments published late on Sunday, Jaber said he would tell her it was imperative to start work on a full IMF program, which would be expected to involve loans, as Lebanon had worked seriously on financial reforms over the last 18 months.
"Lebanon has accomplished a phase; it passed the banking restructuring law, which was of course a very important message to the Fund and to the world that the parliament and the Lebanese government are serious about reforms," Jaber said in a video released by his ministry.
He said a full-scale agreement with the IMF would have to wait for the passing of the "financial gap law", legislation intended to distribute the losses from the 2019 crash.
In 2022, the government put the losses at about $70 billion, a figure that is likely to be higher now. Those losses need to be distributed between the state, the central bank, commercial banks and depositors, to allow depositors who have been frozen out of their savings to gradually recover their money.
A source familiar with the process said a staff-level agreement could be signed as soon as Monday. A second source said it was likely by the end of the year.
A full IMF program in any case takes longer as it requires approval by the IMF board.
The government put forward a financial gap bill last year but it has yet to be passed.
Financial reforms have been repeatedly derailed by political and private interests over the last seven years. REUTERS