Hala Arafa - Beth:

After two weeks of talks; The International Monetary Fund said in a statement that it has advanced its efforts to secure an aid program to help Lebanon overcome its "unprecedented and complex" economic crisis, but more work is needed.

The International Monetary Fund presented a road map for Lebanon to get out of its financial crisis, which included reforms in the budget to ensure the continuation of debt payment, rebuilding the financial sector, reforming public companies and combating corruption.

The International Monetary Fund, at the conclusion of its hypothetical negotiating mission, said the country would need fiscal reforms to ensure its ability to manage its debt burden, as well as measures to create a "reliable" currency system.

The Washington-based International Monetary Fund began talks last month to bring the Middle Eastern country (Lebanon) out of its deepening economic crisis.

The IMF mission, led by Mr. Ramirez Rigo, held hypothetical discussions from January 24 to February 11, 2022 with the Lebanese authorities on the framework and policies of an economic reform program that could be supported by the Lebanese government.

The International Monetary Fund, in its statement at the conclusion of the discussions, noted the complex and unprecedented nature of the Lebanese crisis, which requires a comprehensive economic and financial reform program to achieve stability in the economy, address deep-rooted challenges, and lay the foundation for sustainable and strong growth.

Gaining broad acceptance for this multi-year program will be essential to its timely and decisive implementation, and at the same time, strong pre-action measures will be necessary to start upending the economy and rebuild confidence," the fund added.

The Fund stressed that the Lebanese economic program should include targeted and time-bound measures through the following five pillars:

 First, fiscal reforms that ensure debt sustainability but also space to invest in social spending and reconstruction efforts.

Second, restructuring the financial sector to strengthen confidence and support recovery.

Third: Reform of state-owned enterprises, especially the energy sector, to provide better services without draining public resources.

Fourth: Strengthening frameworks for governance, combating corruption and combating money laundering and terrorist financing to enhance transparency and accountability

Fifth: A reliable monetary system and exchange rate.

During the mission, progress was made in agreeing on these necessary areas of reform, although more work is needed to translate them into concrete policies, adding that there is a clearer understanding of the unprecedented scale of financial sector losses that must be addressed transparently in line with the sequencing. Hierarchical claims with the protection of small depositors, as already envisaged by the authorities.

The statement said the 2022 emergency budget provides an opportunity to begin addressing the difficult financial situation while taking into account funding constraints.

The statement noted that it would be important to develop a medium-term fiscal strategy that would allow the government to invest in much-needed social spending to support the Lebanese people - and enable reconstruction efforts - while aligning with debt sustainability.

The IMF statement made clear that the Lebanese authorities' plans to boost competition and begin tackling energy sector problems are a promising start, despite the need for careful sequencing and robust implementation.

In conclusion, the IMF statement said that decisive action is needed by the authorities to address the deep-rooted problem of corruption and enhance transparency, including by accelerating the launch of the Procurement Committee and lifting or amending the bank secrecy law in line with international best practices.

The International Monetary Fund reiterated that it will not provide any financial support as long as the Lebanese government does not agree to embark on the ambitious reforms necessary to get the country out of the economic crisis mired in it.

Ramirez Rigo, IMF Mission Chief, said that the IMF team welcomes open and constructive discussions with the Lebanese authorities, as well as with representatives of civil society and the private sector, which have enriched our understanding of the situation. A reform program that can address Lebanon's economic and financial challenges

For her part, the Director of the International Monetary Fund, Kristalina Georgieva, last week described the situation in Lebanon as "extremely terrible" and said that a comprehensive program was required.

It is noteworthy that Lebanon has witnessed an unprecedented economic collapse since 2019, which the World Bank has ranked among the worst in the world since the middle of the last century.

In 2020, Lebanon defaulted on its sovereign debt for the first time in its history, and its currency lost about 90 percent of its value on the black market. This is accompanied by political paralysis that prevents taking reform steps that limit the deterioration and improve the quality of life of the population, of whom more than eighty percent live. Below the poverty line Four out of five Lebanese now live below the poverty line, according to the United Nations, a situation exacerbated by triple-digit inflation.