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Wednesday, July 24, 2024

IMF chastises Lebanon’s reform failure

The IMF has once again criticized Lebanon for failing to implement vital reforms requested by creditors in exchange for releasing emergency bailout funds. Ernesto Ramirez Rigo of the IMF, during his visit to Beirut, stated, “Lebanon has not taken the urgently required reform measures, which will have long-lasting repercussions on the economy.

” Lebanon has been grappling with a severe economic crisis since late 2019, categorized by the World Bank as one of the worst in recent history, plunging the majority of the population into poverty.

In April 2022, Lebanon and the IMF tentatively agreed on a $3 billion loan package to rescue the economy. However, political leaders have yet to enact the painful reforms necessary to commence the 46-month financing program. Although there has been a seasonal increase in tourism, primarily driven by Lebanese expatriates returning for the summer holidays, Ramirez Rigo cautioned against complacency, emphasizing that tourism and remittances fall far short of what is required.

The IMF’s agreement is contingent on several measures, including the passage of a 2024 budget, the consolidation of Lebanon’s multiple exchange rates, the restructuring of the banking sector, and the establishment of formal capital controls. While Lebanon has taken some steps, such as adopting a belated 2023 budget, the IMF has repeatedly deemed them insufficient.

On July 31, Riad Salameh, Lebanon’s former central bank chief, who faces allegations of financial crimes in multiple European countries, vacated his position without a designated successor, leading to a power vacuum in a country already lacking a president and governed by a caretaker government. In late June, the IMF issued a warning that Lebanon’s failure to implement reforms could result in “irreversible” consequences for its economic and social stability.

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