Lebanon awaits IMF economic deal

Lebanon is mired in an economic crisis branded by the World Bank as one of the worst in modern times, but officials are yet to strike an international bailout deal.

The financial meltdown began in 2019, and Lebanon defaulted on its debt last year. Politicians have failed to enact significant reforms to rescue the Mediterranean country, and many blame the ruling class and central bank policies for the crash.

What is delaying progress on talks with the International Monetary Fund (IMF) to strike a deal and unlock crucial donor funds?

How bad is the crisis?

Lebanon's GDP has plummeted from about $55 billion in 2018 to a projected $20.5 billion in 2021, a "brutal contraction" that the World Bank says "is usually associated with conflicts or wars".

Negotiations with the IMF opened in May 2020, but after two months they stalled amid arguments over the size of financial losses. Talks resumed in September this year after the formation of a new government headed by Prime Minister Najib Mikati.

Lebanese officials have yet to submit a plan for negotiation.

But they have since agreed that financial sector losses amount to around $69 billion, according to Deputy Prime Minister Saade Chami, who is leading Lebanon's IMF negotiation team.

The Lebanese pound has lost more than 90 percent of its value in two years, and four out five Lebanese are living under the UN's poverty threshold.

Even though the official value of the pound still stands at 1,507 to the dollar, the central bank has adopted multiple exchange rates to try to combat its devaluation on the black market. 

A unification of the different rates "would not be possible" without an IMF deal and political consensus, central bank governor Riad Salameh said this month, adding that $12-15 billion was needed to kickstart recovery.