New IMF deal in the making
following renewed negotiations

A unified financial plan supported by all relevant parties is essential

Lebanon is making strides toward a unified financial reform plan, a crucial step in overcoming its prolonged economic crisis and unlocking much-needed foreign funding, according to the head of the International Monetary Fund’s (IMF) mission to the country.

Ernesto Ramirez Rigo, leading the IMF delegation, emphasized the importance of a coordinated reform strategy in a meeting with Lebanese President Joseph Aoun. “A unified financial plan, supported by all relevant parties, is essential for Lebanon to regain financial stability and restore investor confidence,” Rigo said.

IMF conditions for aid
Negotiations between Lebanon and the IMF are centered on critical reforms that would pave the way for financial recovery. Since 2019, Lebanon has been grappling with economic mismanagement, rampant corruption, and mounting debt, leading to an unprecedented financial collapse.

The IMF delegation stressed the necessity for all Lebanese stakeholders to approve the proposed financial reform plan before it can move forward in parliament. Achieving this plan will serve as an IMF seal of approval, unlocking international assistance, including grants from donors.

The delegation also underscored the importance of restructuring the banking sector and revising banking secrecy laws—reforms that have been delayed due to political disputes.

Technical discussions and reform priorities
Over the past two days, IMF and World Bank experts have been holding technical discussions with the Ministry of Finance to address public finance transparency and comprehensive economic reforms. IMF officials also met with key leaders, including Prime Minister Nawaf Salam, Parliament Speaker Nabih Berri, and Minister of Finance Minister Yassine Jaber, to discuss the framework for implementing reforms.

Jaber said that appointing a new governor for the Central Bank remains a top priority, as this position will play a crucial role in implementing the economic recovery strategy in collaboration with the IMF. “The issue of frozen deposits in banks will be tackled in stages,” Jaber said. He said that the Ministry of Finance has no direct authority over the banking sector. He also expressed support for amending the Monetary and Credit Law, another key IMF requirement.

The IMF delegation is assessing the foreign exchange market performance and the central bank’s interventions. The discussions will also cover restrictions on bank transfers and the regulation of cash flows—a pressing issue since the financial collapse led to an informal cash-driven economy.

Next Steps in Lebanon-IMF talks
Jaber said that a new agreement between Lebanon and the IMF is in progress following the discussions. Details of the new deal remain undisclosed. It will include key measures such as appointing a central bank governor and advancing financial reforms. A follow-up IMF visit to Lebanon is expected in April to finalize discussions.

IMF Statement at the end of its mission
The IMF said in a statement at the conclusion of its mission: “Lebanon’s economy remains severely depressed, and poverty and unemployment are exceptionally high since the 2019 crisis. The banking sector collapse continues to hamper economic activity and provision of credit, with depositors unable to access their funds. Infrastructure and housing destruction and displacement resulting from the recent conflict have further exacerbated Lebanon's challenges. Humanitarian and reconstruction needs are substantial and require coordinated international support. Furthermore, Lebanon continues to host a large number of refugees, which adds a significant burden to its economy.

Recent policy actions have helped maintain some degree of economic stability. Inflation declined and the exchange rate stabilized following the elimination of the fiscal deficit since mid-2023, supported by the central bank's ending monetary financing and foreign exchange subsidies. Revenue collection has improved despite the conflict, helping to support essential spending, although expenditure pressures intensified in the second half of 2024. However, these steps are insufficient to address the ongoing economic, financial, and social challenges. A comprehensive strategy for economic rehabilitation is critical to restore growth, reduce unemployment, and improve social conditions.

The IMF stands ready, together with the international community, to support the authorities’ efforts in addressing these challenges. Following this fact-finding mission, IMF staff will remain in close contact with the authorities to help them develop a comprehensive economic reform program focused on fiscal and debt sustainability, financial sector restructuring, economic growth enablers, governance and state-owned enterprise reforms, as well as strengthening data provision to enhance transparency and inform policymaking.

We extend our gratitude to the Lebanese authorities and other stakeholders for their constructive engagement and cooperation during this mission."