International Monetary Fund: Lebanon's Reforms Insufficient to Overcome Economic Crisis

The International Monetary Fund stated on Thursday that Lebanon's economic reforms are insufficient to help the country emerge from its economic crisis. Ernesto Ramirez Rigo, head of the IMF delegation in Lebanon, noted that the ongoing refugee crisis in Lebanon, the war with Israel at the southern border, and the escalation of the Gaza conflict are exacerbating the country's dire economic conditions. Since the onset of the Gaza war on October 7 of last year, Israel and Hezbollah have engaged in daily exchanges of fire along the southern Lebanese border. Mr. Rigo pointed out that these clashes have 'caused significant displacement of people within the country and inflicted damage on infrastructure, agriculture, and trade in southern Lebanon.' He added, 'These factors, along with a decline in tourism and high risks associated with war, have made Lebanon's economic outlook extremely uncertain.' According to this IMF official, although the financial and monetary reforms implemented by the Ministry of Finance and the Central Bank of Lebanon, including their move to unify the exchange rate and prevent the collapse of the Lebanese pound, have helped reduce inflationary pressures, Lebanon must take further actions to exit the economic crisis. He stated, 'These policies are minimal compared to the actions needed to alleviate the crisis. Bank deposits remain frozen, and the banking sector is unable to provide credit to the economy, as the government and parliament have failed to find a solution to this banking crisis.' Since the Lebanese economy began to collapse in 2019, the currency has lost about 95% of its value, banks have frozen the savings of most depositors, and over 80% of the population has fallen below the poverty line. This crisis emerged after decades of excessive spending and corruption among the ruling elite, some of whom headed banks that lent heavily to the government.