Lebanese file entirely left off of IMF agenda

The Executive Board of the International Monetary Fund will hold a series of meetings from Monday, December 12, through Wednesday, December 21, during which it will decide how to handle initial understandings and agreements at the level of employees regarding loan programs for various nations around the world.

 

Following the initial agreement on the staff level signed with Egypt on October 27, one of the agenda items is deciding on and providing final approval to the request for a funding program for Egypt.

Tunisia, which has been working with IMF since mid-October and signed its initial agreement at the staff level, will also decide on a comparable request.

If both nations receive final approval from the IMF, as expected, then Tunisia will have cleared the first agreement stage with the IMF in less than two months, while Egypt will have done so in less than a month and a half.

Egypt, for instance, is expected to gradually benefit from credit facilities from the Fund totaling three billion dollars, with additional financing through the Fund's "Resilience and Sustainability Fund" totaling one billion dollars.

Furthermore, the agreement with IMF will allow Egypt to release an extra $5 billion from other external finance packages via various international and regional institutions.

Lebanon is not on the Executive Board of IMF's agenda

The Lebanese file, one of the essential financial files in the Middle East and North Africa region, was entirely left off of this agenda, which indicates that its financing program will not be presented for research and final approval.

Even though the initial agreement at the employee level was signed on April 7, which is more than eight months ago, the country has only been able to implement two reform steps. Although, IMF requested eight reform steps as conditions to advance from the initial agreement at the employee level to the final deal on the loan program.

For this reason, the Lebanese file will not be brought before the Executive Council during these meetings and may not be discussed in any of the upcoming meetings. In other words, Lebanon will no longer be on the Executive Council's agenda.

Compared to other examples like Egypt and Tunisia, where the move was made within a few weeks, it is notable how long it took Lebanon to go forward after signing the original agreement (8 months) without being able to finalize this agreement.

However, the complexity of the Lebanese economic crisis and its consequences were supposed to prompt officials to expedite the fulfillment of the preconditions, not the other way around.

This reality shows how lightly Lebanese leaders are handling the fallout from the collapse. While nations hurried to finish their initial agreements with the Fund, as is evident in the cases of Egypt and Tunisia, especially in light of the pressure on demand for the Fund's loan programs, Lebanon did not even show a sincere intention to finish its file.

It is also expected that developing countries will eventually deplete IMF's financing programs as global economic pressures continue, which will cause the IMF to become stricter when approving funding requests from countries like Lebanon.

The Fund's tightening may also rise due to the increased risks associated with developing economies.

Financial recovery plan into retirement

Regardless of what happens with the understanding on the personnel level, various financial sources indicate that the recovery plan on which this understanding was built has practically entered the 'retirement stage' until further notice.

Most of the figures used to determine the hypothesis of the plan when it was created and authorized late last year need an update to estimate the losses and the deposits that can be guaranteed now.

For instance, the item of other assets on the Banque du Liban (BDL) balance sheet climbed by 49.91% from the same period last year to the end of last month, expressing a significant mass of accumulated losses in the budget.

Since the start of the current year, BDL reserves have lost around $2.64 billion in value, and its gold reserves have witnessed several fluctuations due to changes in gold prices on the global market. All these shifts in the figures need a return to the plan to align it with the new adjustments in the financial sector's budgets.

In any case, all paths of financial treatment will undoubtedly undergo a long period of 'clinical death' while waiting for the restoration of life and order to the constitutional institutions, given the presidential vacuum, inability to pass decrees and draft laws related to fateful matters, and the blocking of all legislative paths in the general assembly of the parliament.

However, the issue with the financial plan figures and the failure to implement the terms of understanding at the level of employees with IMF will make stalling on these tracks a fait accompli.

Thus, the economic crisis will keep sliding into darkness.