IMF tells Lebanese delegation time is running out: LBCI sources

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Ten months have passed since Lebanon and the International Monetary Fund signed the initial Staff-Level Agreement, and since then, almost a complete disconnection between the two parties.

There has been a delay in implementing the required reforms, according to what members of the IMF confirmed when they met the Lebanese parliamentary delegation in Washington.

The meeting between the two sides lasted for two hours, during which the IMF confirmed that time is running out for Lebanon. In the event that a year has passed since the initial agreement, the agreement may become invalid, and Lebanon will need a new deal, significantly since the economic situation has changed dramatically, especially with the deterioration of the exchange rate.

As for the required reform laws whose passing by the parliament has been delayed, the IMF considered that the final version of the banking secrecy law issued by parliament has significant deficiencies, especially in terms of the powers of the Banking Control Commission.

The IMF also expressed its reservation on the fact that the Lebanese side has not yet discussed the content of the other required draft laws, namely: the Capitol Control Law, which the joint parliamentary committees have completed its study, the Financial Recovery Law, in addition to the Banks Restructuring Law, which the parliament has not yet begun to study.

The IMF, which had reviewed the 2022 budget prepared by the government, had reservations about the formula approved by parliament. It also reaffirmed its rejection of the wage increase.

As for the issue of distributing losses and reconstituting deposits, the IMF reaffirmed that writing off part of deposits is inevitable and that any investment of state assets cannot address the vast gap, despite the proposal of several MPs for other solutions. MPs Elias Bou Saab and Neamat Freim suggested during the meeting the reconstitution of all deposits without any haircuts in a long-term plan based on a sovereign wealth fund investing in state resources.

The IMF also suggested to the Lebanese side that the reforms should be discussed in a package as one recovery plan for better assessment and application.

In any case, Lebanon will have a new date with the International Monetary Fund delegation that will visit Lebanon in March, so can Lebanon save the current staff-level agreement before it is too late?