Lebanon and IMF begin talks on rescue package

Meeting aims to lift country out of its severe economic crisis

Lebanese pounds at an exchange shop in Beirut, Lebanon, in August 2018. Their exchange rate has collapsed in the past two years. AP

Lebanese officials began much-delayed talks with the International Monetary Fund on Monday about support measures to lift the country out of its extreme economic crisis.

"We hope the negotiations will be concluded as soon as possible but given the complexity of the issues it is possible that other rounds will be held," said Deputy Prime Minister Saade Chami, who is leading the Lebanese delegation.

The talks are taking place online because of Covid-19 restrictions.

Lebanon is hoping for a financial rescue package to rekindle an economy that has been in free-fall for more than two years.

The previous government held several rounds of talks with the IMF but was unable to secure a bailout, amid a failure by the two sides to agree on the scale of financial losses from the meltdown.

The current government opened a preparatory dialogue with the IMF last year and has settled on about $69 billion as its estimate for the financial sector's losses, before the talks that began on Monday.

The state defaulted on its sovereign debt in 2020, the currency has lost about 90 per cent of its value on the black market and four in five Lebanese are now considered poor by the UN.

Despite the country's shocking social and economic decline, Lebanon's ruling class has continued to stall reforms demanded by foreign donors before any assistance is granted.

The Cabinet of Prime Minister Najib Mikati met on Monday for the first time since mid-October, after months of political haggling between its rival factions.

"In this first round of negotiations and over the next two weeks, we will discuss several topics including the budget, the banking sector and the exchange rate," Mr Chami said, according to Mr Mikati's office.