Lebanon eyes new IMF staff-level deal as reform push continues

Lebanon is seeking a fresh staff-level agreement with the International Monetary Fund, Finance Minister Yassine Jaber has said, while noting that a full IMF programme would still depend on Beirut enacting a law to allocate losses from its financial meltdown.

Jaber was in Washington on Monday to meet IMF Managing Director Kristalina Georgieva. In remarks published late on Sunday, he said he would stress the importance of beginning work on a full IMF programme, which would be expected to include loans, citing what he described as serious reform efforts over the past 18 months.

"Lebanon has accomplished a phase; it passed the banking restructuring law, which was of course a very important message to the Fund and to the world that the parliament and the Lebanese government are serious about reforms," Jaber said in a video released by his ministry.

He said a full-scale agreement with the IMF would have to wait for the passage of the financial gap law, legislation meant to distribute the losses from the 2019 crash. In 2022, the government estimated those losses at about $70 billion, a figure that is likely to be higher now. The losses must be shared among the state, the central bank, commercial banks and depositors to allow savers who have been frozen out of their money to gradually recover it.

Lebanon first signed a staff-level agreement with the IMF in April 2022, more than two years after its financial system imploded following decades of profligate spending and corruption among the ruling elite. Implementation of the promised changes was slow.

The current government has fast-tracked reforms, including a bank restructuring law that the IMF welcomed in August. A source familiar with the process said a staff-level agreement could be signed as soon as Monday, while a second source said it was likely by the end of the year. A full IMF programme takes longer in any case, as it requires approval by the IMF board.

The government put forward a financial gap bill last year, but it has yet to be passed. Financial reforms have been repeatedly derailed by political and private interests over the last seven years.