Beirut, Lebanon: An International Monetary Fund (IMF) team, led by Ernesto Ramirez Rigo, visited Beirut, Lebanon, from September 22 to 25, to discuss recent economic developments and progress on key reforms.
At the end of the mission, Mr. Ramirez Rigo made the following statement:
“Lebanon’s economy shows resilience despite the significant impact of the regional conflict, and is recently experiencing a partial economic rebound on the back of strong diaspora tourism. The authorities have correctly maintained a tight fiscal and monetary stance, accumulating some additional international reserves and keeping a small fiscal surplus. They have also moved ahead with the long-awaited establishment of regulatory authorities in the electricity and telecommunications sectors. Moreover statistical capacities at the fiscal level are being rebuilt and digital processes for tax compliance are being strengthened. However, restoring strong and sustainable growth requires implementing ambitious and comprehensive reforms to tackle the structural weaknesses that have been hampering Lebanon’s potential for years. They are also needed to attract international support to help the country rebuild its economy and reconstruct the war-devastated areas. Against this backdrop, the mission focused primarily on the authorities’ efforts to rehabilitate the banking sector and the 2026 government budget.
“The authorities have made progress in developing a strategy to address the severe banking sector challenges. The recent approval of the Bank Resolution Law reflects the dedicated efforts of all stakeholders, though the legislation needs further refinement. The IMF team has suggested amendments to fully align it with international standards and ensure the effectiveness of bank restructuring processes. The authorities should continue working to develop the strategy to recognize and allocate losses, and restore the viability of the banking sector consistent with international standards, protection of small depositors, and sustainability of public debt.
“The IMF team expected a more ambitious approach to the 2026 government budget than in the draft approved by the Cabinet. On the revenue side, the government has rightly envisaged measures to broaden the tax base and improve compliance. However, tax policy reforms should also be considered to create fiscal space for priority spending on reconstruction and social protection. The retraction of excise taxes on fuel poses serious concerns regarding the ability of the government to finance its spending. On the expenditure side, all expected items should be transparently recorded, including those externally financed. Overall, spending decisions need to be consistent with available financing. The mission also called for stepping up efforts toward the adoption of an ambitious medium-term fiscal framework, which is necessary for developing a credible strategy to restore fiscal and debt sustainability.
“The mission looks forward to continuing discussions with the authorities on these issues, including during the upcoming IMF Annual Meetings. The IMF reiterates its commitment to supporting Lebanon in its endeavor to develop and implement a comprehensive economic reform program, in a manner consistent with its policies and mandate.
“The IMF team would like to thank the Lebanese authorities for productive discussions and their hospitality.”
