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IMF, Lebanon reach staff-level funding deal, subject to reforms

April 7, 2022 at 5:42 pm

A worker wearing protective gloves counts Lebanese pound banknotes in Beirut, Lebanon. [Francesca Volpi/Bloomberg/Getty Images]

The International Monetary Fund (IMF) said, on Thursday, it had reached a staff-level agreement with Lebanon for a four-year extended fund facility that would, however, only get full approval from the fund if Beirut enacts a series of reforms, Reuters reports.

An agreement with the IMF is seen as vital for Lebanon to begin exiting a crippling economic and financial meltdown that marks its most destabilising crisis since the 1975-90 civil war.

The extended fund arrangement would run over 46 months and Lebanon had requested access to the equivalent of around $3 billion, the IMF said in a statement.

Lebanese authorities had agreed, prior to the IMF board considering whether to approve the deal, to complete eight reform measures.

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These included approval of a banking restructuring strategy that “recognises and addresses upfront the large losses in the sector, while protecting small depositors and limiting recourse to public resources”.

The measures also included “initiation of an externally assisted bank-by-bank evaluation for the 14 largest banks”, parliamentary approval of a reformed banking secrecy law and completion of an audit of the Central Bank’s foreign asset position.

The facility would also depend on enactment of a comprehensive economic reform programme agreed with the IMF, aimed at restoring financial sustainability, strengthening governance and transparency  and removing impediments to job-creating growth, it said.