Lebanon cannot pull itself out of its economic crisis without a new government to transform the country and launch long-stalled reforms, a senior official at the International Monetary Fund said.
The country defaulted on its debt last year, sending its currency crashing. Its economy shrank by 25% in 2020, the IMF said in a report last week.
A standoff over the make-up of a new government has intensified in recent months, delaying a revival of funding talks with the Washington-based crisis lender.
“The change of direction cannot be done on a piecemeal basis. It requires a comprehensive approach,” the director of the IMF’s Middle East and Central Asia Department, Jihad Azour, told Reuters.
Reforms should focus on the financial sector, public finance, governance, corruption and loss-making utilities that have contributed to a surge in debt, he said.
“In (the) absence of a new government that can lead this transformation, it’s very difficult to expect that the situation will in itself improve,” he added, joining a chorus of officials calling for an end to wrangling over the cabinet.
Lebanon’s crisis started before the COVID-19 pandemic and accelerated after a huge stockpile of ammonium nitrate, stored unsafely for years, exploded in the capital’s port in August last year, killing 200 people.
International support through grants was needed, Azour said.