The International Monetary Fund warned on Thursday that Lebanon is in a very dangerous situation after a year of committing to reforms it has failed to implement, and urged the Lebanese government to stop borrowing from the central bank.
At a press conference at the end of his visit to Beirut, IMF mission chief Ernesto Ramirez Rego said, "We believe that Lebanon is at a very dangerous moment, at a crossroads, stressing that failure to take the required measures would plunge the country into an endless crisis."
The International Monetary Fund announced in April that it had reached a preliminary agreement with Lebanon on a $3 billion aid plan over four years. The IMF conditioned the implementation of the program on the government's commitment to implement prior reforms and the parliament's approval of urgent bills, most notably the Capital Control Law, which restricts withdrawals and foreign currency transfers from banks, in addition to the adoption of legislation related to restructuring the banking sector and amending the banking secrecy law.
The lira recorded a historic collapse as the exchange rate crossed the 140,<> mark to the dollar (Reuters)
Regarding the implementation of the required reforms, Rigaud pointed out that "the Lebanese have made progress, but unfortunately progress is very slow given the complexity of the situation," pointing out that "the country is in a major crisis."
Since 2019, Lebanon has been witnessing an economic collapse that the World Bank has ranked among the worst in the world, and is considered the worst in Lebanon's history.
This coincides with a severe liquidity crisis and tight banking restrictions, with which depositors can no longer access their outstanding savings.
On Tuesday, the Lebanese pound recorded a historic collapse with the exchange rate exceeding the threshold of 140,98 against the dollar, meaning that the Lebanese pound lost about <>% of its value.
Since President Michel Aoun's term ended at the end of October, Lebanon's parliament has failed 11 times to elect a head of state due to deep political divisions. The situation is exacerbated by political paralysis, with a caretaker government unable to take necessary decisions, including reforms that the international community and the International Monetary Fund require support to stop the bleeding of the Lebanese economy.