Lebanon Seeks $70B IMF Deal
Finance Minister Yassine Jaber meets with IMF Managing Director Kristalina Georgieva to discuss a full IMF program, which would involve loans and require passing a financial gap law to address losses from the 2019 financial crisis
Lebanon is hoping to reach a new staff-level agreement with the International Monetary Fund (IMF), with Finance Minister Yassine Jaber meeting with IMF Managing Director Kristalina Georgieva in Washington on Monday. The meeting comes as Lebanon seeks a full IMF program, which would involve loans and require the passing of a financial gap law to address losses from the 2019 financial crisis.
The government has made progress on reforms, including a bank restructuring law that was welcomed by the IMF in August. This law is seen as a crucial step towards securing a full IMF program. The current government has fast-tracked reforms, and Jaber has stated that it is imperative to start work on a full IMF program, given the country's progress on financial reforms over the last 18 months.
The estimated losses from the 2019 financial crisis are around $70 billion, according to the government. A full IMF program would require the passing of a financial gap law to distribute these losses between the state, the central bank, commercial banks, and depositors. This would allow depositors who have been frozen out of their savings to gradually recover their money.
A staff-level agreement could be signed as soon as Monday, according to a source familiar with the process. However, a full IMF program would take longer to implement and requires approval by the IMF board. Lebanon first signed a staff-level agreement with the IMF in April 2022, but it was slow to implement the promised changes.
## Why it matters The IMF program is crucial for Lebanon's economic recovery, as it would provide the country with much-needed loans and support. The passing of the financial gap law is a key step towards securing this program, and it would have a significant impact on the country's ability to recover from the 2019 financial crisis. The government's progress on reforms, including the bank restructuring law, is a positive sign, but the road to recovery will be long and challenging.
## What happens next The next step for Lebanon is to pass the financial gap law, which would pave the way for a full IMF program. The government must work to distribute the losses from the 2019 crisis in a fair and transparent manner, and secure the approval of the IMF board for the program. With the support of the IMF, Lebanon can work towards recovering from the financial crisis and rebuilding its economy.
