Lebanon plans to pass long-delayed IMF reforms in October

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BEIRUT (AP) — Crisis-stricken Lebanon hopes to pass key reforms called for by the International Monetary Fund for a long-delayed but much-needed bailout before the end of next month if “political will” is there, Lebanon’s acting economy minister said on Tuesday.

Amin Salam spoke to The Associated Press after meeting an IMF delegation visiting Lebanese officials since Monday. The reforms would include restructuring the country’s banking system and banking secrecy laws.

The small Mediterranean nation has been mired in a severe economic crisis for three years, leaving three quarters of the population in poverty after the Lebanese pound lost more than 90% of its value.

Talks between the Lebanese government and the IMF began in May 2020 and reached a staff-level agreement in early April this year.

The Lebanese government has implemented some of the IMF’s demands from the deal, which lists five “key pillars” that should be implemented before a bailout program is completed. These include restructuring Lebanon’s struggling financial sector, implementing tax reforms, proposing a restructuring of external public debt, and introducing strong anti-corruption and anti-money laundering measures.

“The IMF remains very committed to helping the Lebanese government move forward with the prior action agenda,” Salam said, adding that since reaching the staff-level agreement, Lebanon has held parliamentary elections while work on the formation of a new cabinet and President Michel Aoun’s six-year term ends on October 31.

Since the economic meltdown that began in October 2019 with nationwide protests against the ruling class, which has ruled the country since the end of the 1975-1990 civil war, little has been done to bail out Lebanon’s worst economic crisis in modern history. The political class blamed for the decades of corruption and mismanagement that led to the crisis is resisting reforms called for by the international community.

Lebanon’s GDP has fallen sharply in recent years, from about US$55 billion in 2018 to US$20.5 billion in 2021. Tens of thousands have lost their jobs since 2019 as the crisis was exacerbated by the coronavirus and a massive explosion at the port of Beirut in August 2020. that killed over 200 people, wounded thousands and caused billions of dollars in damage. Daily life has become a struggle with rampant power cuts and some of the worst food inflation rates in the world.

“We hope that October will be the magic month,” said Salam. He added that planned measures include a capital control law, a bank secrecy law, a bank restructuring law and the passage of the 2022 state budget.

Salam said the four bills have been thoroughly studied and reviewed by Parliament and the government, with the exception of the bank restructuring bills, which are still in the works.

“The other three bills require serious political will, serious political commitment between the executive branch and the legislature,” Salam said in English, adding, “I honestly really think we can get those done in October if the political will is there.”

“We believe that if these four previous measures are implemented soon, we will be much, much closer to a final (bailout) deal this year,” Salam added, referring to a potential full bailout deal with the IMF that the Lebanon would provide around $4 billion and unleash billions more from international governments and institutions. Lebanon’s central bank governor estimates the country needs at least $12 billion to boost its economy.

Salam also said talks with the IMF have focused in part on unifying the value of the Lebanese pound against the US dollar, as Lebanon currently has at least five exchange rates for the pound.

Also on Tuesday came a warning from European Union Ambassador to Lebanon Ralph Tarraf, who tweeted after meeting Aoun that he was urging the President to “do his utmost to secure crucial economic, monetary and fiscal reforms in Lebanon.” committed to supporting and actively contributing to their implementation.” Tarraf met Aoun with other ambassadors, including the envoys of Switzerland and Norway.

“The time to act is now,” Tarraf tweeted after the meeting, urging Lebanon to implement reforms called for by the IMF.

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