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Lebanon yet to finalise plan to secure IMF bailout deal

Talks with the International Monetary Fund resumed in September this year but Lebanese officials have yet to submit a comprehensive recovery plan.

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The Lebanese pound has lost more than 90 percent of its value in two years, and four out of five Lebanese are living under the UN's poverty threshold.

Lebanese officials have yet to strike an international bailout deal as talks with the International Monetary Fund linger on.

Lebanon's GDP has plummeted from about $55 billion in 2018 to a projected $20.5 billion in 2021, a "brutal contraction" that the World Bank says "is usually associated with conflicts or wars".

Lebanese officials met IMF delegates in early December to discuss "economic policies that will be an integral part of the funding programme that Lebanon could receive," Deputy Prime Minister Saade Chami, who is leading Lebanon's IMF negotiation team, told AFP recently.

"We need to prepare, in cooperation with the IMF, a comprehensive economic recovery plan that will be sent to the (IMF's) funding board for approval," Chami said.

What's on the table?

Lebanese officials have agreed that financial sector losses amount to around $69 billion, Chami said.

He said Lebanon could see "concrete results" as soon as January, but warned that the government must "show it is committed to reforms" before any agreement is reached.

Politicians have failed to enact significant reforms to rescue the Mediterranean country, and many blame the ruling class and central bank policies for the crash.

Lebanon's Prime Minister Najib Mikati said on Tuesday that the IMF team would visit the country on January 15.

The visiting IMF delegation will review the progress the government has made, and may return in early February to finalise a deal, Mikati added.

To audit or not?

A financial audit of the central bank is among the top demands of international donors, and is widely viewed as a precondition for an IMF agreement.

The Alvarez & Marsal (A&M) firm launched an audit in September 2020, but was forced to pull out two months later because the central bank failed to hand over necessary data.

In October this year, Lebanese President Michel Aoun said the company would resume its work, and it is due to submit its report to the government next month.

Former vice governor of the central bank, Nasser Saidi, suggested the IMF would want to examine the audit, but Chami said no demands had yet been made.

A potential IMF agreement will ultimately bring in other donors, such as the World Bank and Gulf Arab states, who may demand it as a precondition for support.