Lebanon’s caretaker prime minister Saad al-Hariri discussed on Thursday the possibility of technical assistance from the International Monetary Fund and World Bank in drawing up a plan to rescue the economy from a worsening crisis, his office said, Reuters reports.
Lebanon is in the throes of a major economic crisis that has shaken confidence in its financial system and been compounded by a protracted struggle over forming a new government.
In a statement, Hariri’s office said he told World Bank President David Malpass and IMF Director Kristalina Georgieva that he was committed to preparing an urgent rescue plan that could be implemented after a new cabinet was formed.
Six weeks since Hariri resigned in the face of unprecedented protests against the country’s elite, political leaders have failed to agree on a new premier and government, steps seen as a prerequisite for restoring confidence and earning foreign assistance.
A hard currency crunch has led commercial banks to enforce tight capital controls. They have all but blocked transfers abroad and capped withdrawals at a few hundred dollars per week. The pound has meanwhile slumped by a third on a parallel market.
Hariri discussed with the World Bank an increase in trade financing for Lebanon to help ward off the possibility of being cut off from the import of basic needs, according to the statement.
IMF spokesman Gerry Rice told reporters the Fund was ready to help. “We are open to supporting the authorities with technical advice as desired by Lebanon,” he said at a regular briefing in Washington.
Global credit ratings agency Fitch said it had downgraded Lebanon’s long-term foreign currency issuer default rating deeper into junk territory to ‘CC’ from ‘CCC,’ citing a “probable” government debt restructuring or default.
Lebanon has one of the highest public debt burdens in the world. Its sovereign dollar-denominated bonds rallied on news of the potential IMF technical assistance.
An international support group for Lebanon that includes world powers and international financial institutions said on Wednesday it was ready to mobilise support but only after a credible government able to stabilise its finances was in place.