IMF urges rallying
around the government plan

Postponing difficult

measures will increase the cost

The International Monetary Fund (IMF) has urged the Lebanese authorities to unite behind the government’s financial recovery plan that has received pushback from the private sector and banks.

The IMF said the country needs a reform program to rescue an economy mired in crisis.

The government has held 17 rounds of talks with the IMF, so far, over the past two months, but has been unable to secure a bailout in part because of internal disagreements.

“For productive discussions to continue it is very important that the authorities unite around the government plan,” said Athanasios Arvanitis, deputy director of the IMF in the Middle East. He said the IMF is ready to work “together with the authorities to improve the plan where this is necessary.”

Arvanitis said the IMF believes that the government’s original plan “went in the right direction. It provided an assessment of the challenges and an estimate of the financial losses.” He warned that attempts to present lower losses and postpone difficult measures will only increase the cost of the crisis by delaying the recovery and hurting the most vulnerable.

Arvanitis said that beyond agreeing on this strategy, it is essential for the authorities to begin implementing critical economic reforms. He said an economic reform program needs to offer a comprehensive strategy to restructure public debt, recapitalize banks, reform key parts of the economy particularly state-owned enterprises, and improve governance and transparency.

The IMF said in April that Lebanon’s economy is expected to shrink 12 percent in 2020.

Jihad Azour, former Minister of Finance, and currently Director of the Middle East and Central Asia Department at the IMF, said that the IMF team is currently discussing with Lebanese authorities the various components of the plan. He said structural reforms are being discussed as well as social protection measures.