There is no way out of the Lebanon crisis except with an agreement with the IMF and a political settlement

There is no way out of the Lebanon crisis except with an agreement with the IMF and a political settlement
There is no way out of the Lebanon crisis except with an agreement with the IMF and a political settlement

The caretaker prime minister in Lebanon, Najib Mikati, stressed that “there is no way out of the current economic and monetary crisis that the country is suffering from without approving the final agreement with the International Monetary Fund.”

He pointed out that “a way out of the impasse must be through a general solution and a general settlement that includes, above all, the election of a president of the republic as soon as possible, the formation of a new government, and the acceleration of the desired reforms.”

Mikati indicated that the agreement with the IMF secures the flow of income in foreign currencies to Lebanon, whether through the fund directly, or through donor countries later, which will not extend a helping hand if there is no international observer for the reforms, namely the IMF.

Also, the conclusion of the agreement will enable the country to be placed on the path of positive economic growth, and reduce the social and economic pressures that Lebanese families in general suffer from, says Mikati.

Mikati’s words came during his sponsorship today, Thursday, of the opening of the “Beirut Economic Forum 2022” organized by the Union of Arab Banks under the title “Arab Experiences in Economic Reform, leading to an agreement with the International Monetary Fund.”

Last April, the Lebanese authorities and the International Monetary Fund team reached a staff-level agreement on comprehensive economic policies that could be supported by a 46-month financing arrangement, with a request for 2.1 million Special Drawing Rights, approximately $3 billion.

The reform program that Lebanon pledged to implement depends on several pillars, most notably the unification of the exchange rate, approval of the general budget, restructuring the banking sector, improving public finances, reforming the public sector and its institutions, especially the electricity sector, improving governance and fighting corruption, amending the banking secrecy law, and others. Of the structural reforms necessary to receive monetary financial support.

And Lebanon approved some laws in response to international conditions, including: the general budget, lifting bank secrecy, increasing the electricity tariff, and starting the path of unifying the exchange rate, by adopting an exchange rate of 15 thousand pounds in the next stage, starting next month with the customs dollar, with a step towards restoring Bank restructuring In the midst of administrative procedures on the part of the Central Bank, some troubled banks began to be affected.

These steps were met by the observations of economists, who consider that they come to please the International Monetary Fund, but they are incomplete and random and harm citizens and depositors in the first place on whom the burdens of the crisis are placed.

Mikati pointed out in his speech that the Lebanese banking sector is suffering today from a severe and dangerous crisis, so that the efforts of all political, monetary and banking authorities should be combined in order to contain the existing imbalances and advance the sector towards recovery and exit from its current slump.

Mikati mentioned that the banking sector contributed effectively to the formation of the gross domestic product, and thus the per capita income, which amounted to 8 thousand dollars prior to the recent crisis, which placed Lebanon among the middle-income countries in the world, and provided 60% of the financing needs of the public sector, and 50% of trade financing. external. It also contributed to financing the private sector with a portfolio of loans to the gross domestic product that exceeded the 100% threshold.

Mikati believed that “the current crisis that the banking sector has been suffering from since October 2019 is a sectoral crisis that has its roots in irregular economic conditions and weak public finances, in light of the significant exposure of banks’ budgets to public sector risks.”

And he considered that “there are two options available today: the first, which must be avoided by all means, is represented by the scenario of standstill, stagnation and no reform, which may eventually lead to an absolute (lira), while the second option is based on regular restructuring according to a reform program with the International Monetary Fund.” That would be the key to the necessary correction of the financial situation in general.

Mikati pointed out that this year the Lebanese economy achieved a growth of two percent, and it is expected that the growth next year will be 3 and a half percent, and in 2024 it will be five percent. The big crisis that happened.


The article is in Arabic

Tags: Lebanon crisis agreement IMF political settlement

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