agreement in principle with the IMF for a 3 billion dollar aid plan

agreement in principle with the IMF for a 3 billion dollar aid plan

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That’s it ! After endless procrastination, Lebanon and the International Monetary Fund (IMF) finally agreed on a financial assistance plan worth 3 billion dollars (2.76 billion Euros).

If the country of the cedars now has an agreement in principle, it will however have to launch a series of reforms so that this financial system, which will be spread over four years, becomes effective.

However, this “yes but” will not be easy in a Lebanon whose decision-making apparatus seems to be in a vegetative state, hampered for many decades by corruption and inter-confessional struggles.

A clearly identified roadmap

After two weeks of discussions in Beirut between the IMF delegation led by Ernesto Ramirez-Rigo, head of mission for Lebanon, and the team of Lebanese negotiators, the two parties agreed on a precise list of reforms to be engage in order to trigger the obtaining of financial assistance.

Among them, a restructuring plan for the public and private banking system, including a complete audit of the accounts of the Banque du Liban (BDL). The Lebanese government will also have to put in place a medium-term debt restructuring strategy.

The objective of such maneuvers: to recover the economy in free fall since 2019 of the country which was once nicknamed “the Switzerland of the Middle East”.

The necessary reforms are really a visa stamp for donor countries to start cooperating with Lebanon and put Lebanon back on the map of global finance.

Najib Mikati, Lebanese Prime Minister.

In addition to its directly financial aspect, once granted, this agreement will send a strong signal to potential foreign investors, as Lebanese Prime Minister Najib Mikati pointed out.

In the wake of the announcement made by the IMF on Thursday evening, Saudi Arabia announced the return of its ambassador to Beirut, five months after his recall to Riyadh following a diplomatic crisis.

“Lebanon is facing an unprecedented crisis, which has led to a dramatic economic contraction and a sharp increase in poverty, unemployment and emigration,” Ernesto Ramirez Rigo, the IMF’s mission chief, told AFP. outcome of the visit which ended on Thursday.

Nearly 80% of the Lebanese population lives below the poverty line.

In addition, one crisis hiding another, the situation has been aggravated by the Covid-19 pandemic and the explosion of the port of Beirut in August 2020 – a case on which the Lebanese are still waiting for justice to be done – and more recently by the war in Ukraine.

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