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Urgent economic reforms in Lebanon vital to avoid irreversible consequences, says IMF

The global lender says the country requires strong financial support from the international community 

Urgent economic reforms in Lebanon vital to avoid irreversible consequences, says IMF
[Source photo: Anvita Gupta/Fast Company Middle East]

Lebanon has been crippled by a number of long-running, seemingly intractable crises for decades. In the past couple of years, the economic crisis has devastated the country, sparking widespread protests against what is seen as an incompetent political system. Much has been exacerbated by the COVID-19 pandemic and the deadly explosion that ripped through the Beirut port in 2020. Nearly half of the country’s population lives below the poverty line, and 35% are out of work.

The Lebanese lira has lost approx. 90%of its value, while food prices have increased almost tenfold since May 2019.

The International Monetary Fund (IMF) called for urgent action to avoid the irreversible consequences of the country’s prolonged economic and financial crisis. 

Speaking to reporters, IMF spokesperson Julie Kozack said the IMF staff held an Article 4 consultation with the Lebanese government on June 1. It said there was a need for urgent economic reforms in the country to end the “severe and deepening crisis.” 

“Lebanon needs urgent action to implement a comprehensive economic reform program to arrest the severe and deepening crisis and to allow Lebanon’s economy to recover,” Kozack said. 

She expressed her concerns about the delays in implementing principle reforms as they were leading to deepening and prolonging recovery. 

“We are concerned about irreversible consequences for the economy, especially for the poor citizens of Lebanon and the middle class,” she said.

She stressed that while the IMF was committed to supporting Lebanon, financial support from the neighboring countries and the wider international community was equally important as the country had “very large financial needs.” The Lebanese government needs to obtain political support to execute the economic reforms outlined by the IMF three years back to overcome the economic crisis. 

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