According to sources close to the Lebanese authorities, the delegation of the International Monetary Fund led by Ernesto Ramirez which met with various local officials demanded the approval of various measures aimed at halting the economic collapse of Lebanon before the legislative elections of May 2022.
These measures would, however, include amendments to the 2022 budget that the government and the political parties would refuse, since these would be unpopular decisions. The IMF, for its part, would point out that the figures for the 2022 budget are unrealistic and impossible to hold. He also points out that the salary increase decided in 2017 due to the upcoming legislative elections would have cost double the estimated figures of the Ministry of Finance then headed by Ali Hassan Khalil.
In addition to a correction of the 2022 budget, IMF officials would have stressed the need to unite exchange rates but above all to determine with more precision the losses of the banking sector and to better distribute them. As a reminder, the plan presented by the Mikati III government provided for 55% of the losses in this sector to be borne by depositors alone, an unheard of figure, in favor of bank shareholders who would thus be less affected by these losses. As a reminder, more than 40% of bank shares belong to politically exposed persons.
The IMF delegation would thus have underlined the necessary frankness concerning the losses of the banking sector. As a reminder, if the Mikati III government estimates the losses of this sector at 63 billion dollars, IMF experts estimated them at 83 billion dollars in 2020. In addition, rating agencies estimate the losses of the local financial sector at more than 100 billion dollars at the end of 2021.
Another pitfall, the IMF delegation would have underlined the shortcomings of the Lebanese plan and in particular the absence of precise projects and timetables linked to the restructuring of the financial sector but also of the telecommunications and public electricity sectors.
For his part, the Head of State, General Michel Aoun recalled the responsibility of the Mikati III government and its Prime Minister, stressing that the lack of rapid implementation of reforms is costing the population. He thus underlined that “the international community clearly demands to have credibility in the work of the various Lebanese institutions, as well as to accelerate the adoption of the 2022 finance bill. These delays, note Lebanese sources, are detrimental to Lebanese interests, particularly financial and banking.
A further visit by the delegation should take place around the middle of this month to discuss the progress made.
