Lebanon is waiting for the International Monetary Fund to confirm a $10 billion loan programme and rescue plan. But Economy Minister Raoul Nehme told Bloomberg Television on Monday that the IMF may only provide half that amount.
Such a move would cause the carefully planned rescue that the IMF has spent several months preparing to unravel. Lebanon needs $30 billion in total, Nehme said, and there are friends and allies willing to pay back debts and provide loans and grants. But only if the IMF rescue plan goes through.
The IMF talks, which began in May, have stalled over disagreements between Lebanese politicians on assessing losses and how to move forward. Unless an agreement can be reached, the IMF will refuse to fund and this will usher in very dark days for the country.
On Monday, Moody’s Investors Service downgraded Lebanon’s credit rating to C, the lowest rating in its scale. This comes in the wake of the country’s default on its debt on 7 March. Moody’s cited the need for a plausible recovery plan for the country, indicating concern that the one made by the IMF might not happen.
The country is now in a state of near-chaos. The Health Ministry has just declared lockdown measures to control the novel coronavirus threat for the second time starting on July 30, as the local newspaper l’Orient – Le Jour
Lebanon has entered hyperinflation. With a 462 per cent annual inflation rate and food prices rising by almost 200 per cent this month, Lebanon has joined Venezuela in hyperinflating. The
Nehme has warned that
“There is no alternative to an IMF program that will allow Lebanon to get out of the crisis,” French Foreign Minister Jean-Yves Le Drian said. “France is ready to mobilise itself and its partners to support Lebanon but credible and serious reform measures must be taken,” Le Drian told the press.
How did all this come about?
“For the last two decades, Lebanon had been living off capital inflows,
The house of cards collapsed late last year, when large withdrawals led to a run on deposits, followed by a sudden stop to capital inflows. By the beginning of this year, Lebanon was
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