Lebanon and IMF to restart funding program negotiations

Lebanon's Prime Minister Najib Mikati travelling to attend a ceremony conferring his powers, Dalati Nohra/Handout via REUTERS
Lebanon’s Prime Minister Najib Mikati travelling to attend a ceremony conferring his powers, Photo: Dalati Nohra/Handout via Reuters

Lebanon will restart funding program negotiations with the International Monetary Fund after talks stalled in November 2021.

Since May 2020, the IMF and Lebanese officials have been unable to reach an agreement on achieving the preconditions to unlock donor funds for a necessary recovery program. Since the start of the country’s economic crisis in 2019, the Lebanese Lira has lost 90% of its value, and the national debt sits around $90 billion.

The latest rounds of negotiations are unlikely to relieve the burden on an economy in complete disarray due to political polarization. Lebanese officials remain divided over whether to allow investigators to audit the country’s central bank, a precondition for international donors and an issue that ended negotiations in 2021.

Furthermore, any potential agreement would require the approval of parliament. Since October, both the Hezbollah and Amal Movement parties have boycotted parliament and called for early elections in May 2022. This political climate has made any potential agreement ripe for politicization by candidates, decreasing the likelihood of making it through parliament. A potentiality which will only increase public discontent and exacerbate fragile tensions between Lebanon’s socio-ethnic factions.

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