Can Lebanon obtain an IMF loan, imitating Egypt's example?

For the third time in ten months, the official currency rate in Egypt reached historical lows at about 30 pounds to the US dollar and got very close to the black-market rate. However, the country has been following the track of the International Monetary Fund (IMF).

Unifying the exchange rate and preventing the intervention of the Central Bank to stabilize it were the most prominent reform conditions required from IMF, which recently agreed to grant Egypt a new loan of $3 billion.

This was in light of the country's struggles with a lack of foreign currency, a sharp decline in reserves, and a devaluation of its exchange rate, particularly following the withdrawal of about $20 billion from the country due to investors' concern about the effects of the Russia-Ukraine war and global financial difficulties. 

Therefore, the state was pushed to enact the capital control law to stop the further leakage of dollars.

As a country that imports most of its goods, the devaluation of the Egyptian pound will make life even more difficult for Egyptian people and lead to a new round of high prices and inflation.

IMF affirmed that the currency's value dropped to achieve the exchange rate unification, which would regulate the market and create confidence to draw investments. This would also assist local businesses in selling their products abroad at competitive prices to bring dollars into the country, strengthen the currency and thus combat inflation.

Furthermore, the Egyptian authorities had promised to adopt several reform measures, such as controlling public spending. 

However, some people described these conditions as unfair, stressing that the IMF loan would increase the nation's debt.

On the other hand, others believed that this loan represents the last opportunity for advancement and opens the door to external financing.

However, Egypt's story is close to that of Lebanon.

 

Even if Lebanon's economy is way smaller than Egypt's, it still has the opportunity to obtain a loan for the same amount (roughly $3 billion), which opens the door for obtaining external financing of more than $10 billion to help it get out of its crises. 

But since the initial agreement with the Fund, almost a year has elapsed. Yet, none of the required conditions and reforms have been implemented: No endorsement of the capital control, no amendment of the banking secrecy law, no plan to restructure the banks, and instead of moving to unify the exchange rate, the chaos with the exchange rates is still existing.