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IMF slams Lebanon’s ‘very slow’ progress on badly needed economic reforms

Beirut yet to meet requirements it accepted in April to receive a $3 billion loan needed to jumpstart failing economy

Lebanese security forces are deployed as people gather outside the Blom Bank branch in the capital Beirut's Tariq al-Jdideh neighborhood on September 16, 2022, to express their support to a depositor, who stormed the bank demanding to withdraw his frozen savings. (Ibrahim AMRO/AFP)
Lebanese security forces are deployed as people gather outside the Blom Bank branch in the capital Beirut's Tariq al-Jdideh neighborhood on September 16, 2022, to express their support to a depositor, who stormed the bank demanding to withdraw his frozen savings. (Ibrahim AMRO/AFP)

BEIRUT, Lebanon — The International Monetary Fund on Wednesday condemned Lebanon’s “very slow” progress on implementing reforms needed to unlock a $3 billion loan crucial to revive the country’s battered economy.

Lebanon and the IMF reached a conditional agreement on the loan in April to help the country stem its economic crisis, which the World Bank has branded one of the planet’s worst in modern times.

But Lebanon has yet to enact the reforms needed to unlock the funds.

“Despite the urgency for action to address Lebanon’s deep economic and social crisis, progress in implementing the reforms… remains very slow,” said Ernesto Ramirez Rigo, who headed an IMF delegation that visited Beirut this week and met with top officials.

“The majority of prior actions have not been implemented,” he said in a written statement, adding that delays in implementation would “only increase the costs to the country and its population.”

The IMF conditioned the funds on a series of measures, notably parliament approving a 2022 budget and a reformed bank secrecy law as well as restructuring the banking sector and implementing formal capital controls.

“Completion of these and other prior actions is also needed for the IMF board to consider the request for a financial program with Lebanon,” Rigo said.

Small depositors should be “fully protected,” he added after they lost free access to their savings, trapped in the Lebanese banking system when the economy sank.

Lebanese have grown increasingly desperate after nearly three years of economic meltdown, with at least seven people storming their own banks last week to withdraw frozen savings, and prompting banks to close this week until further notice.

Economy Minister Amin Salam, who met with the delegation, said the IMF was pushing Lebanon to enact reforms before it heads for presidential elections in the coming weeks.

“Before we enter the period of presidential elections, we must try to enact those four” measures, he told AFP.

The mandate of President Michel Aoun ends on October 31 but there is no consensus on naming his successor, as Lebanon’s economy continues to crash.

Lebanon’s Finance Minister Youssef Khalil (L) and Minister of Economy Amin Salam (R) leave the presidential palace in Baabda, east of the capital Beirut, following a cabinet meeting on September 13, 2021. (ANWAR AMRO / AFP)

In a possible protracted deadlock, politicians have yet to agree on a new government since the mandate of the outgoing cabinet expired in May.

Ministers are currently operating in a caretaker capacity until a new team is formed.

Parliament has also been gripped by paralysis, with a session to approve the 2022 budget adjourned last week to September 26 due to the lack of a quorum.

“The IMF prefers to accomplish those things at a time when there is still a bit of political stability in the country,” Salam said.

An IMF delegation is due to return to Beirut in October to follow up on progress, Salam said.

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