On Thursday, March 23, 2023, the International Monetary Fund warned that Lebanon is going through a “very dangerous moment” in light of an accelerating economic collapse, warning that failure to implement urgent reforms would plunge the country into an “endless crisis.”
In a press conference at the end of a visit to Beirut, the head of the IMF mission, Ernesto Ramirez Rigo, said, “We believe that Lebanon is at a very dangerous moment, at a crossroads,” adding that the “existing situation and failure” to take the required measures would plunge the country into “a crisis that has no end.” she has”.
The International Monetary Fund announced in April that it had reached a preliminary agreement with Lebanon on a $3 billion aid plan over four years. However, its implementation is linked to the government’s commitment to implementing prior reforms and the parliament’s approval of urgent draft laws, most notably the “Capital Control” law that restricts withdrawals and transfers of foreign currencies from banks, in addition to the approval of legislation related to restructuring the banking sector and amending the banking secrecy law.
With regard to implementing the required reforms, Rigo indicated that “the Lebanese have made progress, but unfortunately the progress is very slow, given the complexity of the situation,” pointing out that “the country is in a major crisis, and much more was expected in terms of implementing and approving legislation” related to reforms.
Since 2019, Lebanon has been witnessing an economic collapse, which the World Bank ranked among the worst in the world, and is considered the worst in Lebanon’s history.
This coincides with an acute liquidity crisis and tight banking restrictions, with which depositors can no longer access their outstanding savings.
On Tuesday, the lira recorded a historic collapse, with the exchange rate exceeding the threshold of 140,000 against the dollar, before it fell below 110,000, after the Banque du Liban issued a circular to limit the collapse of the lira, which lost nearly 98 percent of its value.
Since the end of President Michel Aoun’s term at the end of October, the Lebanese parliament has failed 11 times to elect a president due to deep political divisions.
Political paralysis exacerbates the situation, with a caretaker government unable to take necessary decisions, including the reforms required by the international community and the International Monetary Fund to provide support in order to stop the bleeding.