Negotiations with the International Monetary Fund… This is what is required of the government

A few days ago, Prime Minister Najib Mikati sent a letter to the International Monetary Fund requesting the Fund’s assistance to develop an economic recovery program.

Under this book, technical meetings with the International Monetary Fund began via the “Zoom” technology, after which official negotiations will begin.

The next step, after the “Zoom” technical meetings, will be a rapid resumption of official negotiations on a rescue plan that would put an end to the accelerating economic collapse that has been plaguing the country for two years..

According to informed sources, before the start of the formal negotiation phase with the International Monetary Fund, the government must first develop 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..

It was understood that the government would proceed in this context from the previous plan B that was developed with the financial consulting company “Lazard”, from which a delegation visited the President of the Republic, and they agreed to reformulate the plan and amend the figures contained therein..

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 started, as well as restructuring the financial sector and determining how to cover the financial gap in the Banque du Liban.

Third, the government should ensure that there is a political consensus to implement all the reform conditions and clauses required by the International Monetary Fund before liberating any financial support, especially since some of the conditions will be non-populist and will not fit the agenda of the parties represented in the government, as they coincide with the period of parliamentary election campaigns. . Thus, it is important to stress that international financial institutions and donor countries require countries under financial pressure to adhere to the IMF program, before agreeing to provide them with financial support..

Fourth, the broad outlines of the required reforms include: Accurately controlling revenues and expenditures with the aim of implementing measures related to reducing the fiscal deficit, which requires restructuring the public sector, 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..

It is known that the items that will be updated in terms of numbers and losses or the parties that will bear them are still subject to in-depth study, especially that the time available does not exceed three months to sign an agreement with the International Fund.

The information indicates that what requires this short period is that the Fund itself does not engage in negotiations with any country during a period close to the political entitlements, and therefore the preparation of the plan and agreement on the numbers and unified approaches became a condition for starting negotiations with it during the end of October as a maximum. Only then will it be possible to reach an agreement with the Fund within a short period of time, the results of which will begin to appear early next year, before the parliamentary elections set for the end of March.

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