As ongoing power shortages leave lights off around Beirut, the latest talks between Lebanese officials and the International Monetary Fund have centered on reforms to the electricity sector.
Speaking to reporters Monday, Jihad Azour, director of the Middle East and Central Asia Department at the IMF, said discussions are ongoing.
“The last session took place last week on Friday, and the purpose of this session was to look into the details of the reform plan for the electricity and the energy sector, which constitute an important part of the government plan,” he said.
Apart from being important to IMF negotiations, electricity sector reforms are key to unlocking $11 billion pledged to Lebanon at the CEDRE international donor conference in 2018.
Lebanon is requesting $10 billion in assistance from the IMF to help the country get out of a crippling financial and currency crisis, but in recent weeks, discussions have hit snags.
Last month, two members of Lebanon’s negotiating team – Finance Ministry official Alain Bifani and financial adviser Henri Chaoul – stepped down, with Chaoul saying, “I think literally no one is doing their job.”
And earlier this month, Lebanon’s Finance Minister Ghazi Wazni said the talks were on hold until economic reforms begin and until the Lebanese side agrees on a common approach to calculating losses.
Government and Central Bank officials have been in dispute over the size of financial sector losses, which the government had estimated at 241 trillion Lebanese pounds (about $62 billion at the current exchange rate of 3,900 pounds to the dollar set by the Central Bank for providing foreign currency to importers), while banking sector officials have argued that the figure is inflated.
‘Important to unite around government’s plan’
IMF Deputy Director of the Middle East and Central Asia Athanasios Arvanitis told reporters Monday that the IMF believes the estimate of financial losses presented in the government plan was “in the right order of magnitude” and urged Lebanon’s leaders to come together around the plan, which he said “went in the right direction” from the IMF’s perspective.
“At this point, for productive discussions to continue, it is very important that the authorities unite around the government’s plan,” he said. “From our side, we are ready to work together with the authorities to improve the plan where this is necessary. However, we’re also worried that attempts to present lower losses and to postpone difficult measures into the future would only increase the cost of the crisis by delaying the recovery and also hurting particularly the most vulnerable.”
The IMF projected negative growth of -4.7 percent in the region overall in 2020, due to the effects of the COVID-19 crisis and the decline in oil prices, but projected “double digit” contraction in Lebanon.