Lebanon aims to pass long-delayed IMF reforms by October

BEIRUT — Crisis-hit Lebanon hopes to pass key reforms demanded by the International Monetary Fund for a long-delayed but urgently needed bailout before the end of next month if there is “political will”, it said. on Tuesday the Lebanese Minister of Economy ad interim.

Amin Salam spoke to The Associated Press after meeting an IMF delegation that has been visiting Lebanese officials since Monday. Reforms would include restructuring the country’s banking system and bank secrecy laws.

The tiny Mediterranean nation is grappling with a severe three-year economic crisis that has left three-quarters of its population in poverty after the Lebanese pound lost more than 90% of its value.

Talks between the Lebanese government and the IMF began in May 2020 and resulted in a staff-level agreement earlier this year in April.

The Lebanese government has implemented some of the IMF’s demands of the deal, which lists five “key pillars” that should be implemented, before finalizing a bailout package. These include restructuring the ailing Lebanese financial sector, implementing tax reforms, the proposed restructuring of external public debt and putting in place strong anti-corruption and anti-money laundering measures. .

“The IMF is still very committed to helping the Lebanese government move forward with the prior actions program,” Salam said, adding that since the staff-level agreement was reached, Lebanon has held legislative elections while work is underway to form a new cabinet and President Michel. Aoun’s six-year term ends on October 31.

Since the economic collapse began with nationwide protests in October 2019 against the ruling class that has ruled the country since the end of the 1975-1990 civil war, little has been done to help Lebanon emerge from its worst economic crisis. of its modern history. The political class, blamed for decades of corruption and mismanagement that led to the crisis, resisted the reforms demanded by the international community.

Lebanon’s GDP has fallen sharply in recent years, from around $55 billion in 2018 to $20.5 billion in 2021. Tens of thousands of people have lost their jobs since 2019 as the crisis has was aggravated by the coronavirus and a massive explosion at the port of Beirut in August 2020, which killed more than 200 people, injured thousands and caused damage worth billions of dollars. Daily life has become a struggle with widespread power cuts and some of the worst food inflation rates in the world.

“We hope October will be the magic month,” Salam said. He added that planned actions include a capital control law, bank secrecy law, bank restructuring law and adoption of the 2022 state budget.

Salam said the four bills have been extensively studied and discussed by parliament and the government, except for the bank restructuring laws which are still in the pipeline.

“The other three laws, they require serious political will, serious political engagement between the executive branch and the legislative branch,” Salam said in English, adding that “I sincerely, sincerely believe that we can finalize them in October if the political power the will is there.

“We believe that if these four prior actions are done quickly, we are much, much closer to a final (bailout) deal this year,” Salam added, referring to a possible full bailout deal with the IMF. which would provide Lebanon with some $4 billion. and unlock additional billions from governments and international institutions. Lebanon’s central bank governor has estimated that the country needs at least $12 billion to revive its economy.

Salam also said that the talks with the IMF were partly focused on unifying the value of the Lebanese pound against the US dollar, because currently Lebanon has at least five exchange rates for the pound. .

Also on Tuesday, a warning came from European Union Ambassador to Lebanon Ralph Tarraf, who tweeted after meeting Aoun that he urged the president “to do everything possible to actively support and contribute to the implementation of implementation of the crucial economic, monetary and fiscal reforms that Lebanon is committed to. Tarraf met Aoun with other ambassadors, including envoys from Switzerland and Norway.

“Now is the time to act,” Tarraf tweeted after the meeting, calling on Lebanon to implement the reforms demanded by the IMF.

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