The specter of recession haunts Lebanon… International Monetary Fund warns of the delay in implementing economic reforms

The International Monetary Fund (IMF) said that Lebanon must urgently embark on comprehensive economic reforms to avoid “irreversible consequences” for its economy, French newspaper Le Monde reported.

IMF spokeswoman Julie Kozack told reporters: IMF experts consulted Article 4 with the Lebanese authorities on 1 June and concluded that reforms were necessary to end the “serious and growing crisis” facing the Lebanese economy.

Severe depression

“Lebanon needs urgent measures to implement a comprehensive program of economic reforms in order to end the serious and growing crisis and allow the Lebanese economy to recover,” Kozack said, adding that the IMF was concerned that delays in implementing key reforms were continuing, threatening the economy with a severe recession.

“We fear irreversible consequences for the economy, especially for poor citizens and the middle class in Lebanon,” she said.
The IMF remains committed and ready to support Lebanon, but the country will also need significant financial support from the international community as a whole to meet the “very large financial needs” it will face in the coming years, Kozack said.

“To this end, it is essential that the Lebanese government receive broad political support to implement the economic reforms agreed with IMF experts in April 2020 to address the current crisis, she added.”

Kozak also noted that former Lebanese Finance Minister Jihad Azour, who heads the IMF’s Middle East and Central Asia department, was on temporary leave to avoid any conflict of interest after he was appointed by the Lebanese opposition, independent parties and major Christian parties to challenge Hezbollah candidate Suleiman Franjieh for president.
It added that Azour had temporarily resigned from his post at the World Bank and was on vacation “to avoid any perception of a conflict of interest.”

Political crisis

According to the French newspaper, Lebanon has been without a head of state since the end of President Michel Aoun’s term in office at the end of October, deepening institutional paralysis in a country suffering from one of the worst economic crises, worsening in the world in years.

It went on to say that the pro-Iran Hezbollah, the country’s main armed political force, and its ally Amal, support Suleiman Frangieh, 56, the heir of an old Christian Lebanese political dynasty, while opposition MPs said that the consensus around Azour could help him to obtain the 65 votes required in the secret ballot of the 128 members of the Lebanese parliament to fill the position reserved for a Maronite Christian within the complex sectarian power-sharing system in the country.