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On Wednesday, the Lebanese government officially began its first negotiation session with the International Monetary Fund, in a step that it hopes to obtain urgent financial support to exit the cycle of accelerated economic collapse.
Earlier this month, the government requested official IMF assistance, the day after it approved a reform plan in which it hopes to garner external support of more than $ 20 billion.
In a statement, the Finance Ministry said: “The Lebanese government has today started formal negotiations with the International Monetary Fund to discuss the financial recovery plan that the government has implemented” through the video service.
He quoted Finance Minister Ghazi Wazni as saying that the government and the IMF “have completed the first stage of the talks with the aim of reaching an agreement that will get the Lebanese economy back on track.”
“We are satisfied with the atmosphere of these preliminary discussions, and we hope that the next discussions will be equally constructive,” he added.
The two sides held “preliminary discussions” on Monday, according to the statement from the finance ministry.
On the Lebanese side, along with a team from the Ministry and the Bank of Lebanon, representatives of President Michel Aoun and Prime Minister Hassan Diab are participating.
The current economic crisis is the worst since the Civil War (1975-1990), and is the result of years of slow growth, with the state unable to undertake structural reforms.
Lebanon hopes to obtain more than $ 10 billion in external financial support in addition to the $ 11 billion that the international community pledged in the form of grants and loans at a Sidr conference in 2018 to Lebanon, in exchange for structural reforms and the reduction of public spending.
In its austerity plan, the government set five-year targets, including reducing the share of public debt to less than 100 percent, after exceeding 170 percent of GDP. The plan signals the restructuring of the banking and financial sectors, and the implementation of basic reforms such as the electricity sector, which is the largest financial gap.
The government approved its plan months after the Lebanese people, 45 percent of whom are now slipping below the poverty line, took to the streets, lamenting the political class that blames them for corruption and lack of response to crises.
The economic collapse coincides with a decrease in the lira’s exchange rate, whose exchange rate has crossed the threshold of four thousand against the dollar, while the official price is still set at 1507 pounds.
Several parties, including the Association of Banks and Economic Authorities, voiced their opposition to the plan and said they need further consultation. Analysts believe the plan is to reproduce the economy and design financial management away from the free economic system that has long distinguished Lebanon and has been a magnet for capital.
