Discussions with Lebanon ongoing to resolve the economic crisis, IMF says

Lebanon's GDP is set to contract 12% this year, while the country's debt ballooned to $92bn at the end of January

FILE PHOTO: The International Monetary Fund (IMF) headquarters building is seen ahead of the IMF/World Bank spring meetings in Washington, U.S., April 8, 2019. REUTERS/Yuri Gripas/File Photo

The International Monetary Fund is working with Lebanon to resolve its economic crisis but has yet to make a breakthrough, managing director Kristalina Georgieva said.

The country is battling a financial crisis regarded as its biggest threat since the civil war of 1975 to 1990, while the Lebanese pound has lost 75 per cent of its value since October.

Ms Georgieva said in a tweet on Friday that authorities in Beirut had “put the request to the fund to work on their programme with the objective of stabilising the economy. It is not yet at the point when I can deliver some categorical good news on that front”.

“It has been really difficult. And the core of the issue is whether there can be unity of purpose in the country that can then carry forward a set of very tough, but necessary measures,” she said.

Lebanon formally asked the IMF for a loan of at least $10 billion (Dh36.7bn) last month. The economy has buckled under the weight of mounting debt that forced it to default on Eurobonds in March.

Long-running political disputes and successive changes of government have also prevented Lebanon from carrying out structural reforms needed to unlock pledges worth $11bn by international donors.

Gross domestic product is expected to contract by 12 per cent this year, according to the IMF. The country’s debt ballooned to $92bn in January, making it one of the highest debt-to-GDP ratios worldwide.

“All I can say is that we are putting our best people to work with Lebanon, but we do not yet have a reason to say there is a breakthrough. And I’ll tell you it breaks my heart. Lebanon is a country that has entrepreneurial people. It is a country that has been doing [a] service to the world by hosting refugees – Palestinian refugees [and] now a huge number of Syrian refugees,,” Ms Georgieva said.

"It is clear what needs to be done, but it is the doing, coming in, this unity of doing it [that] we need to still work on.”