During a news conference in Beirut, the International Monetary Fund (IMF) mission chief, Ernesto Rigo, warned that Lebanon is in a dangerous position and that without reforms, the country will face a crisis.

The IMF and Lebanon had reached a conditional agreement on a $3 billion loan in April of last year to save the economy, which has been struggling since 2019. However, nearly a year has passed and the required changes have slowly materialized. The IMF noted that progress has been insufficient and Rigo stated that Lebanon is in a difficult situation.

It’s been nearly a year, and officials have not accelerated the changes. The IMF noted that the progress has been “very slow.” Regarding the reforms, Rigo said, “One would have expected more in terms of implementation and approval of legislation. Lebanon is in a very dangerous situation.”

Conditions were set by the IMF for the funds to be allocated towards an economic recovery plan and key reforms. While some reforms have been implemented, including passing a budget for 2022, conducting an audit of the central bank’s foreign assets position, and revising the bank secrecy law, progress is still being made.

Rigo noted that solutions should include adjusting “fiscal policies,” addressing banking sector losses and strengthening anti-corruption measures. Lebanese banks have imposed withdrawal restrictions, locking depositors from their accounts. “Small depositors are the ones hit the hardest… They are suffering more than they should,” he said. “The loss is so large that, unfortunately, there will have to be a redistribution between the government, banks, and depositors.”

According to Reuters, Lebanon’s economy has suffered due to the significant decline in the value of its currency against the US dollar, with a loss of approximately 98% since 2019, leading to triple-digit inflation.

Furthermore, the IMF has urged Lebanon to take additional steps that still need to be implemented. These include enacting a capital control law, passing legislation to address the ongoing banking crisis, and unifying the multiple exchange rates for the Lebanese pound.