IMF warns without reforms, Lebanon could see hyperinflation

The International Monetary Fund gave a grim assessment Thursday of Lebanon’s prospects for getting out of its deepening financial crisis, saying that without reforms, the country is headed for hyperinflation.

Since late 2019, tiny Lebanon has fallen into the worst economic crisis in its modern history, rooted in decades of corruption and mismanagement by a political class that has ruled the country since the end of the 1975-90 civil war. Three-quarters of Lebanon’s population of over 6 million, including a million Syrian refugees, now lives in poverty and inflation is soaring.

Ernesto Ramirez Rigo, the head of the IMF mission visiting Lebanon, said at a news conference Thursday that continued inaction by Lebanese leaders would leave the nation in a “never-ending crisis” in which it could spiral into hyperinflation, “affecting the quality of life of many Lebanese for years to come.”

The IMF visit came as progress towards finalizing a sorely needed IMF bailout package for the struggling country has largely stalled.

Since reaching a preliminary agreement with the IMF nearly a year ago, Lebanese officials have made limited progress on reforms required to clinch the deal, which include restructuring the country’s debts and its ailing banking system, reforming its barely functioning public electricity system and making governance reforms.

The visit was part of the regular assessments the IMF conducts of all member countries and was not directly related to the negotiations for a bail-out. However, Rigo expressed frustration at the slow rate of progress on the reforms required to reach a deal. (AP)