Lebanon to start virtual talks with IMF next week

The International Monetary Fund logo is seen inside its headquarters at the end of the IMF and World Bank annual meetings in Washington, U.S., October 9, 2016. REUTERS/Yuri Gripas/File Photo

Jan 22 (Reuters) – Lebanese officials will start talks with the International Monetary Fund on Monday, an official government source told Reuters.

An IMF spokesman also told Reuters on Saturday that a team would begin virtual talks with Lebanese authorities next week.

The Lebanese government has said it hopes to reach an initial agreement with the fund for financial support between January and February. Lebanon is in the throes of an unprecedented financial crisis and an IMF deal is widely seen as the only way for it to get help.

The fund said in December it assessed a figure of $69 billion announced by Lebanese officials for losses in the country’s financial sector.

Disagreements in Lebanon over the scale of losses and their distribution torpedoed IMF talks in 2020. The central bank, banks and political elite rejected figures set out in a government plan approved at the time by the IMF .

Lebanese Prime Minister Najib Mikati said in September that the financial recovery plan to be drawn up by his cabinet will include a fair distribution of the losses suffered by the financial system, but the cabinet has not met since October.

It will meet again on Monday to discuss the 2022 budget, but no clear details have been released on the stimulus package.

Lebanon’s financial system collapsed in 2019 due to decades of corruption and waste in the state and the unsustainable way it was funded. The trigger was the slowdown in hard currency inflows into the banking system, which lent heavily to the government.

Several reforms the IMF would likely seek, including cutting subsidies and unifying the many exchange rates in Lebanon’s chaotic monetary economy, are already becoming realities as hard currencies dry up, according to political sources.

Reporting by Tom Perry and Laila Bassam, Writing by Nayera Abdallah Editing by Ros Russell

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