Lebanon strikes $3bn IMF deal in step to addressing crisis

Lebanon strikes $3bn IMF deal in step to addressing crisis

Lebanon reached a preliminary agreement with the International Monetary Fund (IMF) for a $3bn loan facility. The IMF loan will be disbursed over four years in return for the phased implementation of an economic recovery plan that will see the country overhaul its banking sector, restructure its debts and rationalise government spending. The staff-level agreement is subject to the approval of the IMF board. “Lebanon is facing an unprecedented crisis, which has led to a dramatic economic contraction and a large increase in poverty, unemployment, and emigration,” Ernesto Ramirez Rigo, who led the IMF mission, said in a statement released Thursday. “The crisis has been compounded by the Covid pandemic and the August 2020 port of Beirut explosion, while the conflict in Ukraine is exacerbating pressures on the current account and inflation and straining further food and fuel supplies.” The government had sought to win the endorsement of the Washington-based lender in recent weeks by approving much-delayed plans to overhaul the loss-making electricity sector and introduce capital controls, as demanded by international donors. Lebanon has been contending with a full-blown financial meltdown since late 2019, when decades of mismanagement and corruption erupted into a simultaneous banking, debt and currency crisis.