Lebanon faces an unprecedented economic and financial crisis, rooted in decades of corruption, state capture, and flawed policymaking, which have in turn resulted in an accumulation of colossal liabilities. The settlement of aggregated losses in the financial sector, estimated at USD 72BN in September 2022, is a pre-requisite to reviving the banking sector and kickstarting growth. This should evidently go hand in hand with other key pillars for recovery, namely debt restructuring, a medium-term fiscal framework, exchange rate unification, governance reforms, and a growth inducing agenda.
Since the onset of the crisis in 2019, successive governments have sought to ensure political buy- in around a recovery plan that would form the basis of a program with the International Monetary Fund. A first plan was adopted by the Diab government in April 2020 and soon thereafter shot down by concerned stakeholders. A second plan was presented by the outgoing Mikati government in May 2022, this time based on a staff-level agreement with the IMF. An amended version, adopted in September 2022, integrates new elements that seek to further increase deposit recovery levels and thereby garner wider buy-in.
Both the May 2022 & September 2022 versions still require an accurate quantitative analysis. Their suggested treatment of losses would also greatly benefit from the input of delayed audits in the financial sector. What these propositions mostly lack however, is stakeholder alignment around them and political will for implementation - despite significant momentum for convergence over the past several months.
The paper below captures different stakeholder positions vis a vis the financial restructuring plan. It is the output of a stakeholder mapping and mediation exercise that Kulluna Irada has launched with the purpose of identifying areas of divergence -and convergence- across the different actors, and charting recommendations for the way forward. A summary of key findings is presented in what follows.
The full paper is available to download as a pdf by pressing on the link below.