Technical discussions with the Lebanese authorities have begun

Technical discussions with the Lebanese authorities have begun
Technical discussions with the Lebanese authorities have begun

A senior official at the International Monetary Fund said that the Fund and the Lebanese authorities have started technical discussions to get the country out of its crisis, stressing the need to deal with the issue of losses incurred by the financial sector, according to Reuters.

The IMF program is by and large the only way Lebanon can get much-needed foreign financial assistance out of one of the world’s most severe economic downturns.

Jihad Azour, director of the IMF’s Middle East and Central Asia Department, told Reuters that Lebanese Prime Minister Najib Mikati had requested assistance from the Washington-based lender in times of crisis, as technical discussions had begun.

He said, “The last time we got full knowledge of the situation dates back to August 2020, before the resignation of the previous government, so there are many things that have happened and we need to update the numbers and a new baseline.”

Lebanon defaulted on its international debt in March of last year, after years of political turmoil and mismanagement of the economy, which made it unable to service the debt burden, which “Goldman Sachs” estimated last month, to be more than 300 percent of GDP. at current market exchange rates.

Since late 2019, the currency has lost nearly 90 percent of its value, the poverty rate has risen, and the banking system has been paralyzed. The Fund estimates that the Lebanese economy contracted by 25 percent last year, and the inflation rate reached nearly 85 percent.

Talks between Lebanon and the IMF collapsed last year, largely because Lebanon’s central bank, banks and politicians could not reach an agreement with the previous government on the scale of losses in the financial system.

“It is very important to address the problems faced by the financial sector, especially financial losses,” Azour said.

The financial recovery plan for Lebanon, which was drawn up last year, before talks with the Fund worsened, revealed a $90 billion gap in the financial system.

Prime Minister Mikati told Reuters last week that his government is working to provide the necessary financial figures to the fund in the coming days.

 
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