Managing Director Kristalina Georgieva's Remarks at the International Conference in Support of the Population of Lebanon

IMF News, August 4, 2021

Source details

Canonical URL

Managing Director Kristalina Georgieva's Remarks at the International Conference in Support of the Population of Lebanon

Other formats

• Markdown version
• Structured JSON version
• Bundle manifest

Bibliographic details

• Published: August 4, 2021

Context and current situation

• Since the Beirut explosion in August (last year), parts of the city have been rebuilt, but hoped-for political, social, and economic reform has not materialized.
• Living conditions in Lebanon have dramatically deteriorated.
• The economy:
  • "has already shrunk by nearly one-third since 2017"
  • "is expected to contract further in 2021–22"
  • "unemployment is through the roof"
• The COVID-19 pandemic "continues to take its heavy toll."

Urgency to act and IMF stance

• The IMF emphasizes both the urgency of immediate action and the need for longer-term transformational reform.
• Recent SDR development:
  • IMF Board of Governors approved a new SDR allocation of "$650 billion" (vote on "August 2").
  • Lebanon would receive "about $860 million of SDRs" from this allocation.
  • Purpose: to strengthen Lebanon’s depleted reserves and help address urgent needs of the Lebanese people.

Guidance on SDR use and accountability

• SDRs must be "used responsibly and wisely."
• Decisions on SDR deployment are sovereign, but should aim for maximum benefit to the country and its people.
• Call to action: international and domestic partners should "work with us to help ensure transparency and accountability of the deployment of Lebanon’s new SDRs allocation."
• The Lebanese people "have the right to know what are these SDRs going to do for them."

Structural reforms and areas of action (IMF priorities)

• The IMF identifies concrete areas to tackle Lebanon’s deeper, systemic problems:
  • Strengthen governance and tackle corruption.
  • Improve performance of state functions, with emphasis on management of state-owned enterprises and the energy sector.
  • "Complete an audit of the central bank and the electricity provider."
  • Implement a fiscal strategy:
  • Combine "deep debt restructuring" and reforms to restore credibility.
  • "Pay attention to social spending as part of this strategy."
  • Pursue a comprehensive restructuring of the financial sector:
  • "Recognize upfront the losses at private banks and the central bank"
  • Do so in a manner that "protects smaller depositors."
  • Establish a credible monetary and exchange rate system, "supported by unification of exchange rates."

Constraints to IMF engagement

• IMF availability to assist has been ongoing over the past year, but:
  • Engagement "is severely constrained by the absence of an effective government."
  • Urgent appeal to Lebanon’s political leaders to form "a new government that has the will and the mandate to implement reforms."

Closing message

• The IMF "stand[s] by" the people of Lebanon and looks forward to a government stepping forward so the IMF and partners "can join forces to pull Lebanon out of the tragedy of these last years, together."

Managing Director Kristalina Georgieva — Remarks at the International Conference in Support of the Population of Lebanon, August 4, 2021.

References

• https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva
• Lebanon and the IMF
• Speeches
• PRESS CENTER
• https://www.imf.org/en/home