IMF warns Lebanon of economic implosion

The International Monetary Fund warned Lebanon that its economic implosion is accelerating and told authorities to act urgently to pull the country back from crisis.

The government led by Prime Minister Hassan Diab has come under mounting pressure to take steps that could unlock billions of dollars in donor funds. Some officials have demanded a new cabinet to make sure that happens.

During a meeting with Lebanon’s negotiating team, the IMF recommended the government quickly draft and approve a longawaited capital controls law and begin reforms of its ailing electricity sector, a person familiar with the talks said. The Washingtonbased lender asked the central bank, government and lawmakers to begin discussing how to best distribute losses in the financial sector based on figures provided by the government, said the person, who asked to go unnamed because the meeting wasn’t public.

“The IMF has understandably asked for a united front from the Lebanese side,” Finance Minister Ghazi Wazni said yesterday. “Now is the time to come together and push these talks forward.” The IMF didn’t immediately respond to requests for comment.

Rescue plan

Lebanon has been in talks with the IMF for a $10 billion bailout to overhaul its economy after its local currency lost 80 per cent of its value on the black market. The government drafted what it called a rescue plan that estimated losses incurred by the central bank and local lenders at 241 trillion pounds ($69 billion), based on an exchange rate of 3,500 to the dollar, compared with the official peg of 1,507.50.