IMF "stands ready to support Lebanon", plan ready in weeks

BEIRUT: Lebanon should move quickly to implement reforms to stabilize the country's economy, the International Monetary Fund said Thursday, with a plan expected to be ready in weeks according to the finance minister.

"Given the severity of economic conditions in Lebanon, it's important that the government designs and implements promptly a comprehensive package of reforms to effectively address the economic challenges and improve Lebanon's economic prospects," IMF spokesman Gerry Rice told AFP in Washington. 

While Lebanon has not officially asked for financial support, the IMF "stands ready ... to assist the authorities in those efforts."

Lebanon's debt burden, one of the largest in the world, is now equivalent to nearly 170 percent of its gross domestic product. Last week, it defaulted on its debt obligations for the first time in its history. 

Weeks ago, an IMF team met with Lebanese officials, and is now waiting to see their plans "on how to tackle the economic challenges they face," Rice said.

Speaking to Reuters, Finance Minister Ghazi Wazni said "Lebanon welcomes all international financial assistance without exceptions. But when it comes to the IMF, this depends on several matters: that the understanding with the IMF - if Lebanon resorts to it - ... does not negatively affect the political situation in Lebanon."

Lebanon is in need of $25 to $30 billion of assistance over the next five years to get out of the crisis, he told Reuters. 

An IMF bailout has been rejected up this point by the Iranian-backed Hezbollah, with experts noting that the majority of reforms stipulated by the fund would dampen the group's influence. 

Iran, however, said Thursday it had asked for an emergency $5 billion loan from the IMF to help fight the spread of the coronavirus that’s swept across the country, infecting more than 10,000 people and killing hundreds. Lebanon is dealing with its own outbreak, with over 70 infections and four deaths. 

Reforms, sources say, include a decrease in the size of the public sector or wages, putting an end to illegal smuggling and revamping the electricity sector. How many of these would be greenlit by Hezbollah remains to be seen. 

Despite Lebanon's local currency losing more than 40 percent of its value, Wazni maintained that the peg would hold for the "foreseeable future."

"Currently, we will keep (the currency peg) in order not to increase inflation ... and we will consider a flexible policy later on," he said.

Lebanon has been rocked by the worst financial and economic crisis in decades, with prices increasing by almost 60 percent and many businesses forced to shut down.