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Perhaps a hope for an agreement between Lebanon and the IMF


Written on Tuesday, November 30th 2021 à 14:59 | Read 262 times


A step seems to be about to be taken, but the obstacles are still numerous as the ruling elites are holding back the process to protect their interests.


Lebanon is like its port. (Photo: Malak Jaafar/WFP)
Lebanon is like its port. (Photo: Malak Jaafar/WFP)
LEBANON. After informing Lebanese President Michel Aoun, Deputy Prime Minister Saadé Chami announced on Thursday 25 November that technical negotiations with the International Monetary Fund (IMF) were almost complete. They concern the amount of the country's financial losses and especially their breakdown between the banking sector, the State and the Central Bank of Lebanon. The BDL has not yet provided the IMF with this information, but is expected to do so before the end of the year. The governor of the BLD, Riad Salamé, is under judicial investigation in Lebanon and in six European countries. They concern the conditions under which his personal fortune and that of his entourage were built up.
 
This is a step imposed by the IMF before it sends a team to Lebanon to finalise the actual negotiations on the monetary and economic policies that the country must undertake in order to benefit from the assistance of the international monetary fund.
 
A first attempt by the IMF has already failed in July 2020, due to disagreements on the distribution of these losses between the banks, the state and the BLB. According to Olivier de Schutter, UN Special Rapporteur on extreme poverty and human rights, political elites own 43% of bank assets. Yet credit institutions hold 80% of the Lebanese public debt. A colossal debt that would exceed 170% of GDP. The elected officials theoretically in charge of leading reforms are therefore directly, financially, interested in their failure to succeed. However, the IMF is making the granting of several billion dollars in loans conditional on the consolidation of public finances, the restructuring of public debt and the banking system, the extension of social protection measures and the reform of public enterprises. In particular, the IMF calls for the losses of the banking system to be borne by the banks' shareholders and the largest depositors.
 
The parties finally agreed to set the losses at $55 billion, with the state, the banks and the BDL each bearing a third of the losses. Depositors, who are included in the group of banks, will have to "mop up" about 10% of the 55 billion.
 
This recovery plan still needs to be approved by the Council of Ministers. However, the last council (13 October) theoretically devoted to this essential issue for the future of Lebanon has been postponed without any date being set. The ministers affiliated to the Hezbollah group and the Amal movement demanded that the judge in charge of the investigation into the explosion in the port of Beirut be dismissed.
 
Lebanon is in a dramatic situation. The country is home to one and a half million Syrian refugees, the Lebanese pound has lost 90% of its value, the pandemic and the explosion of the port of Beirut have strongly impacted an economy already on its knees due to corruption and clanism.



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