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BEIRUT: The International Monetary Fund on Thursday welcomed the new Lebanese government’s request for support in addressing severe economic challenges.
Lebanon in January elected a new president after a more than two-year vacuum, and then formed a government led by Prime Minister Nawaf Salam. In February the IMF said it was open to a new loan agreement with the country following discussions with its recently-appointed finance minister.
The previous caretaker administration did not enact reforms the IMF had demanded to implement a loan package to save the collapsed economy.
The world lender “welcomed the authorities’ request for a new IMF-supported program to bolster their efforts in addressing Lebanon’s significant economic challenges,” the IMF said in a statement.
“Lebanon’s economy remains severely depressed, and poverty and unemployment are exceptionally high since the 2019 crisis,” said Ernesto Ramirez Rigo, the head of the IMF’s delegation to Lebanon.
Lebanon’s economic crisis has pushed most of the population below the poverty line, according to the United Nations.
International donors including the IMF have called on the Lebanese authorities to implement major reforms, including restructuring the banking sector, in order to unlock funding.
In April 2022, Lebanon and the IMF reached conditional agreement on a $3-billion-dollar loan package but painful reforms that the 46-month financing program would require have not been undertaken.
Ramirez Rigo pointed to positive steps including the stabilization of the dollar exchange rate and reduced inflation.
But he said these were “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,” he continued.
“The banking sector collapse continues to hamper economic activity and provision of credit, with depositors unable to access their funds,” Ramirez Rigo said.
He moreover pointed to substantial infrastructure and housing needs resulting from the conflict between Israel and Hezbollah, which ended with a November 27 ceasefire.