Lebanon reaches tentative agreement with IMF on economic policies

BEIRUT — Lebanon and the International Monetary Fund on Thursday reached an agreement in principle on comprehensive economic policies for the crisis-hit country that could eventually pave the way for some relief, unlocking billions of dollars in loans.

The four-year deal, which is subject to IMF management and board approval, was announced by Lebanese Prime Minister Najib Mikati after a meeting with IMF delegates in Beirut. He said Lebanon had promised the IMF that Beirut would implement far-reaching reforms in the small country notorious for corruption.

The agreement in principle – a first step on what will certainly be a long and complicated road – offers a glimmer of hope to the small Mediterranean country in the grip of a devastating economic crisis. The World Bank has described the economic crisis as one of the worst the world has seen in more than 150 years.

The IMF said in a statement that the Lebanese authorities and the IMF team which has been in Lebanon for two weeks have reached “a staff-level agreement on comprehensive economic policies” which could be supported by a fund agreement. extended 46 months, or EFF, with requested access to approximately $3 billion.

The IMF statement indicates that the Lebanese authorities, with the support of IMF staff, have formulated a comprehensive economic reform program aimed at rebuilding the economy, restoring financial viability, strengthening governance and transparency, removing barriers to job-creating growth and increased social and reconstruction spending.

This is a first step on the way to an IMF bailout in Lebanon. For that to happen, Lebanon would need to implement reforms, including drafting a capital control law, restructuring the country’s banking sector, and amending decades-old bank secrecy laws.

“The crisis requires a comprehensive reform program,” Mikati said, in order to face the challenges ahead and achieve “financial and economic stability and achieve permanent and strong growth.”

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