IMF begins talks with Lebanese officials in effort to resolve nation’s financial crisis

IMF begins talks with Lebanese officials in effort to resolve nation’s financial crisis
Prime Minister Hassan Diab will meet a delegation from the International Monetary Fund to discuss Lebanon's waning economy. (File/AFP)
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Updated 18 February 2020

IMF begins talks with Lebanese officials in effort to resolve nation’s financial crisis

IMF begins talks with Lebanese officials in effort to resolve nation’s financial crisis
  • International Monetary Fund will give advice but final decision rests with Lebanon’s government
  • As financial chaos continues, money changers are accused of profiteering, and robberies are more common

BEIRUT: Meetings between Lebanese officials and a delegation from the International Monetary Fund began on Tuesday in an attempt to find a solution to the nation’s financial crisis.

Lebanon asked the IMF six days ago for help to develop an economic rescue plan in light of a $1.2billion Eurobond debt that is due for repayment on March 9. It is the first of three looming debts due between now and June, worth $2.5bn in total, plus an additional $2bn in interest on a $30 billion debt portfolio.

The participants in the meetings will include Lebanese Prime Minister Hassan Diab, central bank Governor Riad Salameh and representatives of the Banking Control Commission of Lebanon.

“Lebanon’s economic and financial crisis is being addressed to mitigate its repercussions,” President Michel Aoun told the UK’s Senior Defense Adviser for Middle Eastern Affairs, Lt. Gen. Sir John Lorimer. “The IMF will provide its technical expertise in setting up a plan.

“The unstable situation in several Middle Eastern countries in general, and in Syria in particular, has negatively affected Lebanon.”

Amal Movement MP Yassin Jaber said: “Lebanon will wait for what the IMF delegation has to say. It will advise Lebanon and will not impose anything. It will then be up to the 20-minister cabinet to decide whether or not to take the advice.”

The economic uncertainty has caused chaos in the money markets, and anger at what many see as profiteering by the banks and money changers. They have hiked the exchange rate against the dollar to 2,500 Lebanese pounds, even though the official exchange rate remains at 1,507, and in defiance of an agreement to limit the rate to 2,000 pounds.

“The banks’ practices are a form of systematic fraud. They are confiscating the depositors’ money after having (imposed) high interest rates and reaped huge profits,” said MP Mohammad Kabbara.

Mahmoud Murad, the head of the Syndicate of Money Changers in Lebanon, said: “The 2,000 Lebanese pounds price that was agreed upon between the (syndicate) and Salameh after the new government received the parliament’s confidence did not last for more than a week. This is due to the competition from illegal money changers found on roads and in homes.”

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Judge Ali Ibrahim, Lebanon’s financial public prosecutor, on Tuesday filed charges against 18 money changers accused of “violating the currency-exchange law and harming the state’s financial prestige.”

“In its report published two years ago, the IMF said that the exchange rate of the Lebanese pound to the dollar is higher than its actual rate,” said economist Nassib Gabriel.

“In the opinion of the IMF, the political authority has to make a decision on paying the due debt and undergoing reforms. What is important is for the government to have a comprehensive rescue plan, and I do not think that we have enough time to decide on anything else other than paying the due amount.”

The dire economic situation in the country has provoked widespread protests, including demonstrations outside the Central Bank.

It has also sparked an increase in thefts and robberies, which was highlighted during the most recent Central Security Council meeting.

In one incident reported by the National News Agency, gunmen broke into the house of a man in Baalbek, in Bekaa Region, on Monday night and took him to a gas station he owns where they forced him to empty the safe.