Cost of ignoring IMF report warnings: Lebanon's crisis deepens

While Caretaker Prime Minister Najib Mikati, and Parliament Speaker Nabih Berri were preoccupied with their urgent matter: the fate of the "daylight saving time," a crucial conference occurred simultaneously.

The IMF was cautioning the country's leaders that failure to implement necessary reforms would lead to a severe and worsening crisis that would impact the lives of Lebanese citizens for years to come and that the Lebanese banking system was broken.

"Whether the system is bankrupt or insolvent, you can call it whichever the way you want; essentially, you do have system which lacks liquidity and a system that is lacking capital at this point. We think Lebanon is in a very dangerous moment and is at a crossroads; we are in a situation where the status quo, the continuation of the policy in action we think is going to leave Lebanon in a never-ending crisis," an IMF official stated. 

However, what the IMF said is not solely linked to today but instead to 7 years back ago. The whole crisis in Lebanon could have been avoided.

The Swiss newspaper Le Temps revealed in October 2021 that Banque du Liban (BDL) and its Governor Riad Salameh had deleted 14 essential pages from a 2016 report by the International Monetary Fund, which warned of the catastrophe that Lebanon witnessed three years later.

The newspaper also claimed to have obtained a document from a 2016 meeting between IMF representatives and BDL officials, where the IMF team reportedly started their remarks to Salameh by saying, "you are on the brink of the abyss."

Moreover, the newspaper said the IMF representatives highlighted the 4.7 billion dollar deficit in BDL, which represented 10% of the country's economy, and warned that local banks did not have the necessary liquidity to face a possible crisis.

Le Temps considered that this information could have helped prevent the tragedy that Lebanon has been experiencing since 2019.

But officials chose to disregard the IMF warnings and have since plunged the country into an economic abyss.

Lebanon's citizens are now struggling to cope with a rapidly deteriorating economy, rampant inflation, and a severe shortage of necessities such as medicine, fuel, and electricity. With no end in sight to this crisis, it is clear that the warnings of the IMF should have been heeded.