IMF Staff Concludes Virtual Mission on Lebanon

IMF News, February 11, 2022

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Press Release No. 22/33
Date: February 11, 2022
Mission leader: Mr. Ramirez Rigo
Mission format: virtual discussions conducted from January 24 to February 11, 2022
Objective: discuss framework and policies of an economic reform program that can be supported by the IMF

The Lebanese crisis is described as "unprecedented and complex" and requires a comprehensive social, economic and financial reform program to stabilize the economy, address deep-seated challenges, and lay the ground for sustainable and strong growth.
Progress was made during the mission in agreeing on the necessary reform areas, but more work is needed to translate them into concrete policies.
Obtaining broad based buy-in for this multi-year program is fundamental for timely and decisive implementation.
There is a clearer understanding of the unprecedented size of the financial sector’s losses that would need to be addressed transparently consistent with the hierarchy of claims while protecting small depositors, as already envisaged by the authorities.
The 2022 emergency budget presents an opportunity to start addressing the dire fiscal situation while being mindful of the financing constraints.

Fiscal reforms that ensure debt sustainability but also space to invest in social spending and reconstruction efforts.
Restructuring of the financial sector to strengthen confidence and support the recovery.
Reforming state-owned enterprises, and, particularly, the energy sector to provide better services without draining public resources.
Strengthening governance, anti-corruption, and AML/CFT frameworks to enhance transparency and accountability.
A credible monetary and exchange rate system.

Implement strong upfront actions to start turning the economy around and rebuilding confidence.
Translate agreed reform areas into concrete policies with careful sequencing and strong implementation.
Develop a medium-term fiscal strategy that:
- Allows the government to invest in critically-needed social spending to support the people of Lebanon, and
- Enables reconstruction efforts while being consistent with debt sustainability.
Strengthen competition and begin addressing energy sector problems as part of broader reforms.
Tackle deep-seated corruption and strengthen transparency by:
- Accelerating the launch of the procurement commission, and
- Lifting the bank secrecy law or amending it in line with international best practice.

The IMF team welcomes open and constructive discussions with the Lebanese authorities, as well as representatives of civil society and the private sector, which enriched understanding of the situation.
Engagement with the authorities will continue over the coming weeks; the team will remain closely engaged and discussions are continuing to help formulate a reform program that can address Lebanon’s economic and financial challenges.

IMF Staff Concludes Virtual Mission on Lebanon — Press Release No. 22/33, February 11, 2022