The International Monetary Fund will send a team to Lebanon at the end of September to continue discussions on Beirut's comprehensive reform programme.
“Discussions on formulating a comprehensive reform programme continue, and the end goal is to eventually have [one] supported by an IMF programme,” IMF Communications Director Julie Kozack said during a press briefing on Thursday.
Since 2019, Lebanon has faced what the World Bank described as one of the worst financial crises since the mid-19th century, with the local currency losing more than 90 per cent of its value and public services collapsing.
The economic troubles were compounded by a string of unrestrained borrowing by multiple governments, the Covid-19 pandemic and a bombing campaign by Israel against Hezbollah that damaged critical infrastructure.
The World Bank estimated that reconstruction and recovery efforts from the war will cost about $11 billion. “Lebanon's economy continues to face major challenges,” Ms Kozack said.
The fund said it expects Lebanon's economy to have contracted by 7.5 per cent in 2024 following a smaller contraction in the previous year.
Lebanon reached a staff-level agreement with the fund in 2022 that would give it access to roughly $3 billion, but authorities at the time said it did not meet the required reforms to unlock it.
IMF staff visited Beirut earlier this year on what it called a fact-finding mission to hold discussions with the new government.
Last month, fugitive tycoon Carlos Ghosn, who is in Lebanon, said the country requires an IMF programme to help provide fiscal discipline rather than for funding. Mr Ghosn told CNN Business Arabic at the time that Lebanon could receive $3 billion through remittances alone, if diaspora had confidence in the government.
Speaking on Thursday, Ms Kozack said fiscal discipline and financing will be required to support Lebanon's economy.
A comprehensive reforms programme that includes social conditions for Lebanese civilians will be needed to support growth and reduce unemployment, the fund said. But financing also has a role to play to support it.
“The discussions that the staff are having with the Lebanese authorities are really to look at what is the right mix of policies and policy reform,” Ms Kozack said.
Ms Kozack added the broader international community will also need to provide financing in addition to what the IMF could provide.
Lebanon has also been making efforts to restore ties with Gulf states to re-open it for tourists and investors. Lebanon is also seeking support from UAE expertise in security and renewable energy, among other key sectors, Lebanon's ambassador to the UAE Fouad Dandan told The National in June.
“The authorities' reform efforts will require significant support from external partners, preferably on highly concessional terms,” Ms Kozack said.
IMF staff will also visit Egypt this autumn to review progress on Cairo's IMF programme. Ms Kozack did not provide an exact date for the visit.
Egypt's 46-month economic reform programme with the IMF was approved in December 2022. “With macroeconomic stabilisation under way for Egypt, now is the time for Egypt to carry out deeper reforms to really unlock the country's growth potential,” she said.
