Lebanon crisis

Lebanon, IMF reach deal worth up to $3 billion: Statement

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Lebanon has reached a staff-level agreement with the IMF worth about $3 billion, subject to approval by IMF management and the executive board, according to a statement released on Thursday.

“The Lebanese authorities and the IMF team have reached a staff-level agreement on comprehensive economic policies that could be supported by a 46-month Extended Fund Arrangement (EFF) with requested access of SDR 2,173.9 million (equivalent to about US$3 billion),” the IMF said.

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The IMF said Lebanon was facing an unprecedented crisis, which led to a “dramatic economic contraction and a large increase in poverty, unemployment, and emigration.”

The statement said the crisis resulted from years of unsustainable macroeconomic policies fueling fiscal and external deficits and support for “an overvalued exchange rate and an oversized financial sector.”

Severe accountability and transparency problems and a lack of structural reforms also led to Lebanon's unprecedented situation.

The IMF said there are “five key pillars” that should be implemented, including restructuring the financial sector and implementing fiscal reforms, along with the proposed restructuring of external public debt. They also include reforming state-owned enterprises, particularly in the electricity sector, and strengthening governance, anti-corruption, and anti-money laundering efforts.

The IMF also called for establishing a credible and transparent monetary and exchange rate system as there are several exchange rates for the Lebanese pound. It said that there should be parliament approval of a reformed bank secrecy law to bring it in line with international standards to fight corruption.

For his part, Lebanese PM Najib Mikati said the deal would spark interest from foreign donors.

Speaking after the deal was announced, Mikati said the reforms Lebanon vowed to implement were “a visa stamp for donor countries” to re-engage with Lebanon.

“[The reforms will] put Lebanon back on the global finance map,” Mikati told reporters.

Read more: US announces $64 mln in emergency food aid for struggling Lebanon

- Additional reporting by AP

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