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Finance Minister Ghazi Wazni said Lebanon is ready to comply with the request from the International Monetary Fund to float the lira exchange rate, but after receiving external support, provided that a flexible exchange rate is adopted in the next stage.
He added in an interview with Agence France-Presse: “The Monetary Fund always calls for the liberalization of the lira exchange rate. They want to unify exchange rates and float, but the Lebanese government requested a transition phase that approves the rate of flexible change before reaching the float. ” “We have to adjust the stabilization policy to the flexible exchange rate policy in the first stage and for the foreseeable future, and when we have financial support from abroad, we will float,” he added.
The government fears, according to my weight, the consequences of several of the immediate fleets, including the “significant deterioration in the lira exchange rate”, which exceeded the threshold of four thousand against the dollar on the black market, while the Official price is set at £ 1507.
The flexible exchange rate policy is based, as my weight explains, “on a gradual increase in the price of the dollar” against the lira, in a step that requires “coordination between the government and the Bank of Lebanon.”
The first formal negotiating sessions were held on Wednesday. And on Friday, “the first meeting between technicians from both sides will be held to discuss technical issues related to public finances, expenses and income,” according to my weight.
He explained that “Lebanon’s participation in the IMF is about 870 million dollars, and he hopes to reach a higher level, about ten times that amount, or almost nine billion dollars, with the support of brother countries and friends.”
Lebanon hopes that the reforms in the plan will allow it to obtain an additional 11 billion dollars that the international community promised in the form of donations and loans at the Cedar Conference held in Paris in 2018, in exchange for structural reforms and the reduction of public spending. .
My weight hoped that the negotiations would be completed soon. “The sooner we finish the subject of the negotiations, the better for Lebanon,” he said, noting that “the agreement with the IMF gives credibility to the government’s program, opens the Lebanese horizon to international support conferences and facilitates negotiations between Lebanon and creditors. “
My weight said that the first contact with the creditors took place two weeks ago, without adding any details. The government hired financial consulting firm Lazar to take over the negotiation process with creditors.
Regarding the bank restructuring, Wuzni said it “would be taken step by step”, speaking of “various treatment options, including consolidation, which is normal.”
He said: “There are 49 commercial banks in Lebanon, and it is normal for their number to drop to about half in the next stage.”
The House of Representatives is also likely to approve the “Capital Control” project (which controls the movement of bank deposit withdrawals) in the coming weeks, and this project raises concerns for depositors.
Authorities are seeking to pass this law to regulate the relationship between banks and their clients after months of strict restrictions imposed by banks on cash operations and the withdrawal of deposits, before they stop giving the dollar entirely, even from green currency deposits.
Wazani considered that “the economic model in Lebanon is developing from a rentier economy dependent on financial flows and investment (…) to a more productive economy in agriculture and industry and improving employment opportunities.”
The government’s plan was well received by various countries, including France and the United States.
Some fear that deep political divisions impede implementation of the plan. Some have also spoken of fears that aid may not come, even through the International Monetary Fund, because the government is supported, in particular, by Hezbollah, which is designated “terrorist” by the United States.
But my weight emphasized that the plan is “an economic security document, not a political document,” and stressed that “there is no negotiation with the fund in political terms and no political conditions have been established.”
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