IMF to conclude 2025 mission to Lebanon
A fact-finding mission from the International Monetary Fund (IMF) to Lebanon concludes on Friday.
The IMF visit aims to inspect the progress of reforms since Lebanon’s economic crisis five years ago, however, it is unlikely to result in progress towards a previously agreed-upon bailout for the country.
Lebanon’s economy has been in a moribund condition since 2019, when high government borrowing and mismanagement of public finances caused a complete collapse of the financial sector. As a result, Lebanon’s currency lost 95% of its value, and 80% of the Lebanese population fell into poverty as depositors were unable to access their own bank accounts.
In 2022, the Lebanese government and the IMF agreed to a $3 billion bailout of the financial sector. This bailout was conditional upon key reforms, including lifting banking secrecy, harmonizing exchange rates, and establishing an official restructuring plan to compensate depositors for their losses. However, the IMF’s previous fact-finding mission in 2024 found that government reforms were still inadequate.
This IMF visit to Lebanon is unlikely to produce concrete progress towards a full bailout agreement. Lebanon has made progress in the past year in harmonizing exchange rates and curtailing government borrowing, however, the IMF is likely to highlight high deficits that Lebanon incurred during the Israel-Hezbollah war last year. Additionally, reforms to the banking sector have languished: Lebanon’s banking secrecy laws still impede transparency, and a draft law that would compensate depositors is facing significant pushback from private banks. While the IMF delegation will likely speak favorably about the draft law—and offer its recommendations to improve and adopt the law—it will remain infeasible to implement the bailout while these deficiencies remain.