‘Literally no one is doing their job:’ Former adviser to Lebanon gov’t on IMF talks

A financial adviser, Henri Chaoul, working with Lebanon’s government in talks with the International Monetary Fund resigned in mid-June, saying there was “no genuine will” to make reforms.

Lebanon began talks with the IMF in May as the economy continues to tumble. After the government agreed on an economic reform plan, it approached the IMF in a last-ditch effort to pull its economy back from the brink.

Negotiations, however, have been rocky as disputes have broken between the central bank and the government over the size of losses set out in the plan.

“I don’t think anyone is doing their job, and that is the reason I resigned. I think literally no one is doing their job,” Chaoul said in an interview with Al Arabiya English.

With inflation rising and the currency having lost 78 percent of its value, Chaoul warned that without reform efforts Lebanon would soon see hyperinflation take hold, something experts have recently told Al Arabiya English.

Read more: Lebanese turn profit selling US dollars in exchange shops, raise hyperinflation alarm

“You're going to see a rapid depreciation of the currency. And we are witnessing it as we speak. You're going to see unemployment,” he said. “That's going to go up and up and up. You're going to see mass, mass emigration. Wait until the airport opens and see what would happen.”

Unemployment has already climbed, as have poverty rates and food prices, and coronavirus dealt another heavy blow to the economy that has a high percentage of workers in the informal sector.

The airport, which closed amid the coronavirus pandemic, is set to reopen July 1, and Lebanese have started planning to leave their home country.

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With the implementation of new US sanctions on Syria under the Caesar Act, many have speculated how Lebanon will be indirectly affected by the sanctions as the economies of the two countries are interlinked, but Chaoul said the Caesar Act is not the real issue in Lebanon – the real issue is reform, which he said is “100 percent in the hands of the Parliament.”

But for years, the government has failed to reform, and even with the new diagnostic plan presented to the IMF, the political will for real change seems non-existent. New appointments in the financial sector have seen typical sectarian squabbling, rather than a real push to find a path forward.

“I'm worried that we will see a lost decade for Lebanon where you don't recognize the losses and you just play the card of the time to just allow the prices to readjust, allow the liabilities you have in the financial sector to disappear over time and you won't get the recovery.”