The new government of Lebanon can decide to request assistance from the International Monetary Fund to alleviate its financial crisis, but achieving aid requires Lebanon's approval of steps such as increasing taxes and fighting corruption.
The following are some of the measures that Lebanon may have to take within the framework of any agreement based on previous recommendations of the fund, according to what was reported by "Reuters" news agency:
1. Establishing a medium-term plan to bridge the widening financial deficit of Lebanon and return the public debt to sustainable levels, and the IMF had previously recommended Lebanon to target an initial surplus in the range of four to five percent of GDP to help reduce the debt-to-output ratio, which It is currently among the highest in the world.
2. Accelerating the increase in revenues by raising the value-added tax and canceling the exceptions granted to categories such as yachts registered abroad and diesel used in electricity generation and goods and vehicles transporting individuals. Among the recommended steps are also to increase fuel fees and measures to improve revenue collection such as cracking down on tax evasion.
3. The elimination of electricity subsidies is one of the areas that the IMF says will achieve the largest potential savings, and this will include increasing fees to fill the national electricity company’s fiscal deficit as quickly as possible in order to achieve savings, perhaps by targeting the largest consumers first.
4. Extending cash support to the poor and vulnerable groups, in order to mitigate the impact of necessary fiscal controls, the authorities will have to direct an additional 0.5 percentage points of GDP to spend on a social safety net, the IMF said in October.
5. Determine aspects of savings by reviewing public spending, and this may include reforming the public sector wage bill and pensions that engulf a disproportionate mass of revenue.
6. Implement structural reforms, including reducing the cost of investment by enacting laws governing issues such as bankruptcy and public-private partnerships. Implementing reforms aimed at strengthening the competitiveness of the small export sector in Lebanon in order to help maintain the currency peg. Increasing the electricity supply coverage to 7/24 will remove one of the biggest obstacles to investment.
7. Strengthening the financial system by phasing out the support the central bank provides to the government and strengthening the central bank budget. This will also include requiring banks to increase their capital reserves and consolidate deposit insurance.
8. Combating corruption by enacting laws covering areas such as unlawful enrichment and disclosure of assets owned by officials, and the formation of a committee to fight corruption and investigate corruption cases and refer them to the judiciary.
9. After the Lebanese pound has already lost about a third of its value against the US dollar on the black market, speculation has grown that the fund might commit Lebanon to cancel the pegging of the currency to the dollar, and the currency float was a condition with some other countries, such as Egypt, that had received funds from the fund to help them Enhancing the competitiveness of their economies.
In July, the government of former Prime Minister Saad Hariri denied that the IMF had urged Lebanon to unlink the currency.