IMF Begins Visit as Lebanon Grapples with Financial Crisis

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IMF Begins Visit as Lebanon Grapples with Financial Crisis

The IMF has said its team will stay until Feb. 23 to provide broad technical advice. Lebanon has not requested financial assistance from the Fund as it draws up a plan to confront the crisis.

“The Fund is giving its view in light of the present circumstances and the financial, economic and reform measures Lebanon needs,” Finance Minister Ghazi Wazni said in a statement issued by the prime minister’s office.

“The Fund delegation will continue its work until the completion of cooperation with Lebanon to prepare the plan,” Wazni said.

The long-brewing economic crisis spiralled last year as the country’s capital inflows slowed and protests erupted against the ruling elite.

As the crisis deepens, hitting ordinary Lebanese hard, there is no sign of foreign aid. Western and Gulf Arab states that helped in the past have made clear that any support hinges on Beirut implementing long-delayed reforms to address root causes such as state corruption and bad governance.

Prime Minister Hassan Diab’s government - which took office last month with backing from the Iran-backed Shi’ite group Hezbollah and its allies - must decide what to do about looming debt payments, notably a $1.2 billion dollar-denominated sovereign bond due on March 9.

One of Lebanon’s most influential politicians, Parliament Speaker Nabih Berri, on Wednesday said that debt restructuring was the best solution for such maturities.

The Lebanese banking association said that foreign investors had shown a willingness to negotiate debt rescheduling.

Lebanon will on Friday review proposals from companies bidding to provide financial and legal advice on its options, a source familiar with the matter said. The government aims to take a quick decision on who to appoint, the source added.

Bidders to provide legal advice so far are Dechert, Cleary Gottlieb and White & Case, the source said. Lebanon has issued requests for proposals to seven companies bidding to be its financial adviser.

The government on Wednesday formed a committee tasked with preparing an economic recovery plan that includes ministers, government officials, a central bank representative and economists, according to a copy of a decree seen by Reuters.

With hard currency in short supply, banks have been limiting depositors’ access to dollars and blocking transfers abroad since October. The Lebanese pound has slumped from its official peg on a parallel market.

Dollars were being offered on Thursday at 2,450 pounds, reflecting a 60% weakening of the local currency, a dealer said.

Source: Reuters