Lebanon brings back lockdown for four days as IMF mulls $10 billion aid package

The Lebanese government has ordered most of the country to close again for four days, starting Wednesday evening, in an effort to avert a resurgence of coronavirus after relaxing some restrictions.

The country has been locked out since mid-March to contain an epidemic that infected 870 people and killed 26 people. Lebanon started lifting restrictions last week as part of a longer-term plan, leaving restaurants, hair salons, construction sites and others open at lower capacity.

But the cabinet agreed Tuesday to “shutdown” for four days to curb an increase in new infections in recent days, after a drop in cases that the government had hailed as a success.

“This achievement risks collapsing” because some people did not comply with the guidelines, said Prime Minister Hassan Diab at the meeting.

Information Minister Manal Abdel Samad said the four-day closure, which excludes supermarkets and pharmacies, would also allow health ministry teams to carry out more tests.

She added that the government would reassess its original five-step plan to gradually reopening the economy.

Beirut airport has been closed for almost two months, with the exception of flights bringing thousands of expatriates home, which has increased the rise in infections.

The lockout already includes a night curfew, security forces patrolling certain streets.

The pandemic has compounded woes in Lebanon, which was already grappling with a financial crisis that has cut the value of its currency by more than half since the end of last year.

IMF discusses $ 10 billion aid plan

The International Monetary Fund said on Wednesday that it had started remote talks this week with Lebanon, which is seeking some $ 10 billion in aid to help it weather the worst financial crisis in its history.

Difficult negotiations await Lebanon, which should enact economic reforms that its sectarian leaders have long avoided if Beirut hopes to obtain international aid, analysts said.

With Lebanon locked in on coronaviruses, the first round of talks began by videoconference.

“The goal is to achieve a comprehensive framework that can help Lebanon cope with the current difficult economic and social conditions and restore sustainability and growth,” said an IMF spokesperson on the talks which started on Monday.

She said discussions will continue in the coming days.

“We are comfortable with the atmosphere of these initial discussions and hope that the discussions to come will be just as constructive,” said Lebanese Finance Minister Ghazi Wazni in a statement.

Beirut formally requested IMF assistance earlier this month in what Prime Minister Hassan Diab called a “historic moment” for a country facing the greatest threat to its stability since the 1975-90 civil war.

The talks will be based on a government bailout that maps tens of billions of losses in the financial system.

An international support group including the United States and France said in a statement that the decision to request an IMF program was “a first step in the right direction”.

Domestic political support was “necessary for the successful conduct and rapid completion of negotiations with the IMF,” said the support group, alluding to the need for consensus among the stormy politicians in Lebanon.

Foreign donors, who have helped Lebanon in the past, say they will not think about providing new aid until the state adopts reforms to tackle rampant corruption and waste – the root causes economic problems in Lebanon.

“Although there is no quick and easy solution to economic reconciliation since there will inevitably be losers in a likely difficult reform process, the crisis has become so complex that the need for action radical is now, “said Ehsan Khoman, director of MENA research. and strategy at MUFG.

None of the main Lebanese parties are opposed to an appeal to the IMF, widely regarded as the only way for the country to obtain support. However, some groups, including the powerful Iranian-backed Hezbollah Shiite group, have warned of conditions that would violate the country’s sovereignty.

Lebanon went into crisis at the end of last year as capital inflows dried up and protests broke out against the ruling elite in decades of poor governance and corruption.

The crisis has more than halved the value of the local currency and fueled unrest, while inflation, unemployment and poverty have soared.

Cash-strapped banks have largely frozen depositors of their savings for months, as dollars have become increasingly scarce.

After defaulting on its sovereign debt in March, Lebanon hopes that an IMF program will help in its discussions with its creditors.

Some economists see the plan as a good first step, but remain skeptical of Lebanon’s ability to adopt reforms to cut public sector spending and reorganize the banking sector after years of dragging and political wrangling.

“We are certainly not out of the woods yet, but a coherent, credible and coordinated IMF bailout over time will reassure investors that Lebanon is on a more sustainable basis,” said Khoman.

The plan also faced a sharp contraction by banks, which are expected to suffer losses of some $ 83 billion. The banks, the main lenders of the government for decades, are working on their own plan which aims to preserve part of their capital.