“Without the IMF, Lebanon is on its way to hell”

Lebanon, in the grip of an unprecedented economic crisis, is on the brink of the abyss. Beirut asked for help from the International Monetary Fund (IMF) in early May after announcing a reform and economic recovery plan that has not yet been implemented.

Without multi-billion dollar assistance from the International Monetary Fund (IMF), will Lebanon be thrown into “hell”? crucial reforms to stop the country’s economic collapse.

Lebanon’s worst economic crisis, exacerbated by the global pandemic of Covid-19 and a sensitive political context exacerbated by tensions between the United States and Hezbollah, the Shiite allied armed movement in Iran, which dominates Lebanese political life.

In recent months, tens of thousands of Lebanese have been laid off or affected by wage cuts. Lebanese books are in free fall, as is the purchasing power of the population. And savers do not have free access to their money, because the banks have imposed draconian restrictions on withdrawals and transfers abroad due to the lack of dollars.

As payment terms, Lebanon adopted a reform plan in late April to negotiate IMF support, which will likely restore some confidence to other donors, but after more than two months and 16 rounds of negotiations between the Washington-based institution and the Lebanese government, talks remain stopped.

“The IMF has left the negotiation session,” said AFP, a Lebanese negotiator on condition of anonymity.

Another Lebanese source close to the matter confirms Lebanese officials. However, “none (of them) want reform” was demanded for decades. “Each faction is fighting for its own interests and allowing the country to sink.”

Insolvency is not surprising, in a country subscribing to repeated crises, torn between various foreign influences and where parties are accustomed to endless negotiations.

Lebanese leaders themselves are accused of profiting from a system plagued by clientelism and corruption, all faith combined.

“Burning the country”

There is “a very powerful lobby” ready to burn the country to avoid revealing everything it has done, “the negotiator accuses.

But the hour is serious. Nearly half of the approximately four million Lebanese live in poverty and 35% of the working population are unemployed.

In October 2019, Ras-le-bol started a new protest movement against the entire political class, unchanged for decades.

So far, Beirut is hoping for about $ 10 billion in IMF assistance, but during the negotiations a parliamentary committee and the government even disagreed on the calculation of government deficits, the central bank and the banks: 60,000 to 241,000 billion Lebanese pounds (or tens of billions of dollars). ). The IMF has requested only one assessment.

The last session “went very badly”, confirms a Western source familiar with the negotiations. The IMF asked “to stop taking them by boat”.

Suddenly, two senior government officials who participated in the negotiations resigned.

The next session, technically speaking, must address the dry issue of the electricity sector – an economic crisis.

“Help us help you, bonsang!”

“Nothing is moving” this week was caused by the head of French diplomacy Jean-Yves Le Drian by announcing an upcoming visit to Beirut. “Help us help you, bonsang!”, He launched for the Lebanese political class, on Thursday, before the French senators.

“Awareness of the risk of collapse is very clearly insufficient from all Lebanese political partners,” he added shortly after the Senate Foreign Relations Committee.

His American counterpart MikePompeoa told him that his country “supports Lebanon as long as it carries out the good reforms and it is not under Iran.”

Among the expected reforms: a reduction in public spending and an increase in revenue through tax collection and the fight against smuggling.

But “there is no political will,” insists analyst Nasser Yassin. Any change would deprive politicians of “their power, their control over the state, the economy and society.”

The IMF is awaiting an audit of the central bank’s accounts and a regulation of informal capital controls. He demands a flow of the national currency, to eliminate the crash between the official exchange rate (1507 pounds for a dollar) and a black market where the dollar is traded at 9000 pounds.

Failure to negotiate with the IMF would also impede the release of $ 11 billion in support promised in 2018 at a conference in Paris.

According to the Western source, there could be no alternative to negotiations with the IMF. “The country is collapsing. You need the IMF label to get you back on track for good reputation.”

Same observation for the Lebanese source near the file. “With an exchange rate that spins and nothing” ends, and “without the IMF, Lebanon is on its way to hell”.

With AFP