The European Commission warned that Lebanon risks heading towards a combined currency, sovereign and banking crisis if no concrete reforms are enforced, saying that donors have been waiting for Lebanon to put the preconditions agreed upon at the CEDRE conference in place.
"Bold moves are seen as essential in several areas to demonstrate the new government’s commitment to the reform plans and to reinvigorate the reform momentum," the commission said in a report entitled "Can Lebanon Defy Gravity Forever?"
"Passing the 2019 budget and presenting a credible medium-term fiscal adjustment strategy will be the first of many steps to charter the path towards fiscal sustainability," the report stressed, outlining the need to enhance buffers and improve asset quality.
The commission also called for dispelling concerns about Hezbollah’s access to government funds, adding that this will help to ensure the banking system’s stability.
"Taking concrete steps in structural reforms, notably by completing and implementing the electricity reform agenda and fighting corruption, will be instrumental in regaining investor confidence and channelling financial inflows into more productive purposes to enhance Lebanon’s long-term growth potential."
Check the European Commission's full report here