Report: Lebanon Begins ‘Difficult’ Negotiations with IMF

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Lebanon begins negotiations on Wednesday with the International Monetary Fund to reach an agreement on funding the government’s economic rescue plan, amid indicators the negotiations are going to be “long and arduous,” al-Joumhouia daily reported on Wednesday.

Observers believe the government has formulated a plan with “many gaps” that will need time to agree and amend, said the daily.

Some items in the plan “may be difficult to achieve, while others were hastily raised with the purpose of completing the plan’s preparation and moving quickly to the stage of negotiating with the IMF,” according to assertions made by economists to the daily.

Earlier in May, Lebanon signed a request for financial help from the IMF with hopes to ease the country’s worst post-war economic crisis.

The government had unanimously approved an economic reform plan, expected to reduce Lebanon’s enormous public debt burden from 170 percent of GDP to less than 100 percent.It aims to see positive economic growth restored from 2022.

According to the economist quoted by al-Joumhouria ,the government’s proposal for a gradual lifting of restrictions on capital movement as of the year 2021, “cannot happen next year.”

He said Lebanon’s worsening financial situation “does not allow for the loss of more dollars and their exit from the country before the balance of payments is corrected, especially that Lebanon needs these dollars to finance imports, which raises question marks about the feasibility of this step.”

‎ ‎He noted that “the final version of the government’s rescue plan removed a clause assigning a global company to audit financial accounts of public sector workers, politicians and their families who own more than a million dollars. It indicates that political pressure was exerted to stop the auditing of accounts.”

He concluded saying that counting on a rapid progress in the negotiations are therefore “illogical. The government will have difficult negotiations as it may be unable to meet the IMF’s conditions, because of the “veto” that may be put by political components that brought it to power.”

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