An imminent agreement between Lebanon and the Monetary Fund next spring?

Prime Minister Nawaf Salam, during the presentation of the ministerial statement before the House of Representatives, affirmed that his government will negotiate a new program with the International Monetary Fund, as well as working to address public debt and financial stumbling. In turn, the International Monetary Fund expressed its aspiration to work closely with the new Lebanese government and President Joseph Aoun.

In April 2022, the previous government had completed an initial agreement with the fund at the level of experts, but the state of institutional paralysis in the country without the implementation of reforms, so that Lebanon has failed over more than two years to elect a president of the country, and the parliament turned into a voter body and the government to the disposal of business. Today, the contracts are completed, so is the agreement imminent with the IMF?

Previous agreement with some amendments
Member of the Economic and Social Council, the economic expert, Dr. Anis Bou Diab, confirmed in an interview with “Lebanon 24” that there is a great possibility to sign an agreement with the Monetary Fund based on the previous agreement with some amendments, especially since there is what has already been accomplished, such as unifying the exchange rate, approving the 2024 budget and preparing a 2025 budget project that mimics the requirements to a large extent.

Bou Diab does not rule out the possibility of reaching a program with the fund in the next spring. “There is a high -level delegation by the IMF that will visit Lebanon within two weeks, to start the stage of negotiations again, and I do not think that it will need a long time, in addition to the matters that were completed in the previous government, the discussion began in laws to combat corruption, and the Minister of Justice recently formed a committee related to the financial work group, but at the same time, but at the same time, but at the same time Associated with money bleaching, judicial reforms, and combating customs evasion. Bou Diab added that the first program with the fund will be a continuation of the previous program with a value of $ 3.6 billion, as it is the fastest, and that its facilities are good as well as its time period, and it is appropriate for Lebanon, and it would contribute to the formation of the Bank of Lebanon so that the centralization can be able to make criminal audit in its accounts and in commercial banks, to crystallize a picture of the extent of banks’ ability to contribute to part of the losses. His plan to restructure the banking and public financial sector. As far as the plan is rapid, the agreement is completed faster, and this depends on the dynamism of the administration in Lebanon, the speedy appointments such as the regulating bodies, the central ruler and security centers in terms of their role in controlling borders and customs, and speeding up these appointments facilitating access to the program.

The dilemma of distributing losses
Lebanon’s status on the gray list of the Financial Action Group is an additional challenge, but Lebanon has completed the requirements of either of them reflects positively on the other, meaning that the completion of an agreement with the IMF automatically facilitates the possibility of leaving the gray list, especially since the requirements are similar. But the biggest dilemma for the completion of an agreement with the fund lies in determining and distributing losses according to Bo Diab, “This problem can be overcome with a participatory work between the state and the Bank of Lebanon and banks, especially since everyone has become aware of the compulsory restructuring of the banking sector, the public sector reform, the regularity of public financial, and the restructuring of institutions owned by the state, on the basis of partnership between the public and private sectors, and reviewing the monetary policy, All of them facilitate the process of going to Nidi negotiation, based on the strengths that were previously absent, as the presence of the president of the republic, a reliable, regional, and international reliable republic.

Deposits: bearing responsibility between the state and banks
Contrary to what was rumored about removing deposits in the supposed program with the IMF, the agreement is a basic step in recovering deposits. As for the state, it stopped all forms of support, and its public debt declined from 100 billion to two billion in the Lebanese pounds, and bonds and Europonds fell from $ 33 billion to about 4 billion. While the depositor alone endures the loss. Bo Diab revealed a proposal from which they may be launched, and it requires a compulsory reserve from 14 % to 3 %, so about 8 billion dollars are liberated, this is in conjunction with the Capital Control Approval Law on specific conditions, and there are many proposals to keep deposits below one hundred thousand dollars, and to find multiple formulas for large deposits.

Requirements not conditions
All these reformist steps are requirements, while the phrase of the conditions of the IMF is not in its place “what the IMF requires requirements that any country must take as part The strongest of the Duwailah, and these reforms were rejected at the time, ”says Bou Diab.

Positive references, followed the election of Joseph Aoun as President of the Republic, amid a remarkable international momentum, which began to translate his effects in his external visits starting from the Kingdom of Saudi Arabia, as well as signs of international support, but the path towards recovery is still thorny, and the challenges before the government are great, from reforms to reconstruction, so can she be able to complete her many work?