Previous negotiations with the International Monetary Fund, initiated by the government of Hassan Diab, were suspended after 17 sessions, due to the difference of the Lebanese negotiating delegation over estimates of the size of the financial losses on which the support program will be built. In parallel, new negotiations were launched, before resuming, with a dispute over the formation of the negotiating delegation.
President Michel Aoun and Prime Minister Najib Mikati formed a delegation to negotiate with the International Monetary Fund, in preparation for the resumption of negotiations on a rescue plan that would put an end to an accelerating economic collapse that has engulfed the country for two years.
The delegation includes Deputy Prime Minister His Excellency Al-Shami, Minister of Finance Youssef Al-Khalil, Minister of Economy and Trade Amin Salam, and Governor of the Banque du Liban Riad Salameh, provided that “experts from the specialists will be sought according to the topics or files raised in the negotiation process,” according to the official statement.
Before the start of the negotiation phase with the International Monetary Fund, the government must inject a clear and comprehensive recovery plan whose numbers and terms are agreed upon in advance by the three parties concerned with bearing losses, namely: the state, the Banque du Liban and the banks, to avoid any disputes that may arise later in the negotiation phase. In this context, the government proceeded from the previous plan that was developed with the financial consulting company “Lazard”, a delegation of which visited the President of the Republic yesterday, and it was agreed to reformulate the plan and amend the figures contained therein, as losses are supposed to have diminished as a result of the decline in the volume of deposits. By no less than $20 billion, and thus the financial gap at the Banque du Liban has decreased.
Second, the public debt and the restructuring of foreign and domestic debt are also a priority, so that the process of negotiating with creditors about the size of losses and deductions from the value of sovereign bonds must be initiated, as well as restructuring the financial sector and determining how to cover the financial gap in the Banque du Liban.
Third, the government must ensure that there is a political consensus to implement all the conditions and terms of authority required by the International Monetary Fund before liberating any financial support, especially since some of the conditions will be unpopular and will not fit the agenda of the parties represented by the government, as they coincide with the election campaign period. Parliamentary. Thus, it is important to stress that international financial institutions and donor countries require countries experiencing financial stress to adhere to the IMF program, before agreeing to provide them with financial support.
Fourth, the broad lines of the required reforms include: implementing measures related to controlling revenues and expenditures in order to reduce the fiscal deficit, which will require restructuring the public sector and reforming the pension system, addressing the Electricity of Lebanon crisis, strengthening governance and public sector institutions and curbing corruption. Once sufficient funding is secured from the international community and official reserves are strengthened, exchange rates should be unified and a transition to a flexible exchange rate regime.
In this context, a member of the appointed negotiating delegation told Al-Gomhouria: “After Bakir” to start negotiations with the International Monetary Fund, explaining that there are technical matters that must be prepared and the “data” re-updated, as we are still today in the stage of initial communication with the IMF. International.
While noting that the ruling is continuity, and therefore it is necessary to start from the previous plan set by Prime Minister Diab’s government, but after it was modified, updated, renewed and “overturned”, stressing that there is no data yet about the items that will be updated in terms of numbers, losses, or the parties that will bear them, “No There is still a long way to go.”
In response to a question about how to address the financial and economic situation and curb the collapse until negotiations begin and a rescue program is reached and implementation begins, the source said that it is the government’s responsibility to address crises until a recovery plan and reform program are agreed upon and financial support is obtained to start the stage of recovery.
Since the path to starting the reform is far away, the current government of Prime Minister Mikati may start negotiations with the International Monetary Fund and put them on the track, but it will not end them before the time of the parliamentary elections and the re-formation of a new government.