Lebanon is actively pursuing a loan agreement with the International Monetary Fund (IMF) to address a staggering $80 billion deficit in its financial sector. Prime Minister Nawaf Salam has indicated openness to IMF involvement in a draft law aimed at resolving the crisis, potentially unlocking much-needed financial assistance.
Beirut previously reached a staff-level agreement with the IMF in 2022. Negotiations with the Washington-based lender have resumed under Salam’s leadership, following Joseph Aoun’s election as President approximately a year ago.
The central bank is expected to present a program to the government before year-end outlining how to distribute billions of dollars in losses among the state, the central bank, commercial banks, and depositors. These losses stem primarily from complex high-interest deposit schemes, excessive borrowing, and sovereign debt defaults.
In an interview, Prime Minister Salam stated, “If we can get 3 or 4 billion dollars, that’s not peanuts – we desperately need such funds… If you are part of a program with the IMF, for investors – whether public or private – that means you are in good shape.”
Salam emphasized that the draft law being developed by the central bank will be “open to amendments and changes, not just to satisfy the IMF. There are also other actors who may have different inputs, but the process has started.”
The IMF has stipulated that Lebanon must implement a series of measures and laws before financing can be approved. These include a mechanism for reorganizing the banking sector and a plan to address the deficit. Salam, a former President of the International Court of Justice, noted that Lebanon has already passed legislation to enhance the transparency of financial institutions, another law to restructure local banks, and a decision to strengthen the judiciary. He described these steps as crucial for restoring confidence in the country’s financial system.
