Lebanon: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Lebanon

IMF Staff Country Reports, June 29, 2023

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Canonical URL: Lebanon: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Lebanon

The 2003 Article IV Consultation highlights that Lebanon has been facing an unprecedented sovereign-banking-currency crisis, which is ongoing for more than three years.
Although the economy showed some signs of stabilization in 2022, it remains severely depressed.
The stabilization in 2022 was supported by:
- the expiration of coronavirus disease measures,
- a rebound in tourism,
- strong remittances inflows,
- a gradual improvement in terms of trade in the second half of the year.
The economic outlook is highly uncertain and depends on the authorities’ policy actions.
Decisive implementation of a comprehensive economic recovery plan could steadily reduce imbalances and provide a policy anchor that will help restore confidence and facilitate return to growth.

Crisis characterization:
- Described as an unprecedented sovereign-banking-currency crisis.
- Ongoing duration: more than three years.
Recent developments:
- Signs of stabilization in 2022, but overall economic activity remains severely depressed.
- Positive contributions to stabilization from tourism rebound, remittances, and improving terms of trade (second half of 2022).
Uncertainty and dependence on policy actions:
- Outlook highly uncertain; outcomes hinge on the timing, sequence, and credibility of policy implementation.
Monetary and external sector analysis:
- The report emphasizes the need for monetary policy measures and unification of the exchange rate.
- Unification of the official exchange rates for current account transactions is identified as critical to restore credibility and external viability.

Exchange rate policy:
- Unify the official exchange rates for current account transactions to restore credibility and external viability.
Monetary policy:
- Implement monetary policy adjustments consistent with exchange rate unification and stabilization objectives.
Transitional safeguards:
- Support exchange rate unification temporarily with capital and deposit withdrawal restrictions.
Comprehensive economic recovery plan:
- Decisive implementation of a comprehensive economic recovery plan is recommended to steadily reduce imbalances and provide a policy anchor to restore confidence and facilitate a return to growth.