Lebanon resumed talks with the International Monetary Fund that had stalled for a year and half due to internal political differences in the country after it reached out to the lender for a $10 billion programme, the finance ministry said on Monday.
The country "expressed its willingness to progress towards reaching an agreement on an appropriate recovery programme that could be supported by the institution and harness broad support from the international financial community", the ministry said an e-mailed statement.
The newly-formed government, led by Prime Minister Najib Mikati, "is fully conscious of the urgency of Lebanon’s social and economic situation and of the challenges lying ahead. The government has repeated its commitment to resume discussions with the IMF as early as possible and formed the team in charge of negotiating with the fund."
The team is led by deputy Prime Minister Saade Chami and includes Finance Minister Youssef El Khalil, Economy and Trade Minister Amin Salam and Banque du Liban Governor Riad Salameh.
Lebanon is enduring its worst financial crisis in three decades that has seen its currency lose more than 90 per cent of its value against the US dollar, led to surging inflation, increased unemployment and poverty. Inflation in the country soared to an annual 123 per cent in July, while the country's gross public debt reached $98.2bn at the end of May 2021, a 5.4 per cent increase from the end of May last year.
“An IMF-supported programme is essential to put the country on a path towards recovery. A funding agreement will ensure that the recovery is associated with the implementation of necessary and long overdue reforms and will help restore confidence in our economy,” Mr El Khalil said at the time of his appointment as finance minister in September.
Lebanon reached out to the IMF in May 2020 for a bailout package but talks stalled due to systematic delays in forming a government and disagreements among the country's various political factions on how to share power.
"The government remains fully committed to engage in a constructive, transparent and equitable debt restructuring process with all other stakeholders, and welcomes the interest of bondholders, including the 'Ad Hoc Lebanon Bondholder Group', to participate in this process," the finance ministry said.
"The government reiterates its commitment to a fair and comprehensive solution for all creditors and will engage, with the support of its financial and legal advisors, in good faith discussions with all its creditors as early as practicable."
Lebanon’s economic crisis ranks among the world’s top 10 crises – possibly even the top three – since the mid-19th century, the World Bank said in June.
The magnitude of the economic depression has "no clear turning point" on the horizon, given the "disastrous" and deliberate policy inaction, the Washington lender said. Lebanon's economy to an estimated $33bn in 2020, from nearly $55bn in 2018. The economy shrank 20.3 per cent last year, after a 6.7 per cent contraction the year before, according to World Bank.
A report by the lender last year said the country was in a "deliberate depression" due to the political paralysis and a failure by policymakers to reach an agreement on a new government and the necessary reforms that could unlock $10 bn of aid from the IMF and another $11bn from international donors.
Source: The National