Senior Lebanese official denies IMF issued call to float currency

Senior Lebanese official denies IMF issued call to float currency
Lebanon’s draft budget was welcomed by the International Monetary Fund as ‘a welcome first step on a long road.’ (Reuters)
Updated 18 July 2019

Senior Lebanese official denies IMF issued call to float currency

Senior Lebanese official denies IMF issued call to float currency
  • The Lebanese pound has been fixed at 1,507.5 to the dollar since 1997

BEIRUT: A senior adviser to Lebanese Prime Minister Saad Hariri on Thursday denied that the International Monetary Fund (IMF) had urged Lebanon to unpeg its currency from the dollar.

Nadim Munla said comments by Hariri to parliament this week about IMF proposals including currency flotation referred to “general recipes” that the fund recommends to governments, rather than specific recommendations for Lebanon.

The pound has been fixed at 1,507.5 to the dollar since 1997, and the IMF has not proposed floating it “recently or in the last few years”, Munla said.

Hariri made his comments at the start of a three-day parliamentary session expected to approve a budget that aims to slash the deficit as a step towards putting the heavily indebted country’s finances on a sustainable path.

Munla said they had been a response to criticism during the debate, adding: “The IMF never in recent history has recommended this; that’s why their concluding statement after the last visit to Lebanon did not include anything to this effect.”

In its statement after a regular Article IV review, the IMF said this month that Lebanon should raise value-added tax (VAT) and increase fuel excise duty as well as trying to increase tax compliance to raise more revenue.

Asked if Lebanon was considering requesting IMF assistance, Munla said Lebanon had never requested an IMF programme, adding: “We do not see the urgency to do that.”

The IMF said the draft budget together with a plan to reform the power sector were “very welcome first steps on a long road.” But it said the 2019 budget deficit would likely be well above the government’s target of 7.6 percent of gross domestic product.