By Laila Bassam
BEIRUT (Reuters) – The new government of Lebanon has taken a significant step by approving a policy statement that outlines its commitment to negotiating with the International Monetary Fund for a new program. The government is determined to address the nation’s financial default and public debt crisis that has plagued the country for years.
The policy statement, which was reviewed by Reuters, highlights the government’s focus on revitalizing the economy, recognizing that this goal can only be achieved through a comprehensive restructuring of the banking sector. Lebanon has been grappling with a severe economic downturn since 2019, when its financial system collapsed due to overwhelming state debts. This led to a sovereign default in 2020, leaving many ordinary depositors unable to access their savings in the banking system.
In an attempt to secure much-needed funding, Lebanon had entered into a draft agreement with the IMF in 2022. However, this agreement was contingent upon implementing crucial reforms, which the authorities failed to deliver on.
The newly appointed Finance Minister, Yassin Jaber, held a meeting with Frederico Lima, the IMF’s Resident Representative in Lebanon, signaling the government’s commitment to engaging with international financial institutions to address the country’s economic challenges.
The political landscape in Lebanon has undergone significant changes, particularly following the weakening of the Iran-backed Hezbollah group during a conflict with Israel. The policy statement issued by the government reflects this shift in power dynamics, emphasizing the need for a state that has full control over decisions related to war and peace.
Furthermore, the statement underscores the importance of adopting a national security strategy and a foreign policy aimed at safeguarding Lebanon from regional conflicts. The government also plans to reinvigorate efforts in the energy sector, specifically in oil and gas exploration, while also establishing a Ministry of Technology and Artificial Intelligence.
With a new administration in neighboring Syria following the removal of President Bashar al-Assad, the Lebanese government sees an opportunity to engage in a constructive dialogue to address border issues and the plight of displaced Syrians in Lebanon.
(Reporting by Laila Bassam and Clauda Tanios; Writing by Tom Perry; Editing by Alison Williams, Alexandra Hudson)
