LBCI: Kulluna Irada meets with IMF delegation to discuss Lebanon's economic crisis and calls for genuine reform

March 21, 2023

Kulluna Irada met with a delegation from the International Monetary Fund (IMF) visiting Lebanon as part of the Article IV mission that requires conducting annual bilateral discussions with member countries to gather necessary economic and financial information. 

According to a statement, the fate of the commitments made by the Lebanese government under the agreement on employees signed with the IMF about a year ago in April 2022 was also discussed in the meeting.

During the meeting, Kulluna Irada highlighted that the ruling class has shown a lack of seriousness in reaching an agreement with the IMF, and has been using negotiations as a means to buy time while being eager to implement a shadow plan. The ruling class seeks to undermine any step towards implementing reforms and follows all delaying tactics to keep its commitments as just ink on paper. 

"This indicates a lack of real intention to reform and facilitate the implementation of the four-year IMF program. Instead, it implements a shadow plan that involves diluting deposits, imposing more austerity measures on the weakest classes, affecting the prospects of recovery in Lebanon, and the shape of society in it. As a result, financial sector losses continue to accumulate, resulting in devastating results for society and the economy, accompanied by the complete disintegration of state institutions," Kulluna Irada added.

Kulluna Irada also pointed out the Lebanese authorities' persistent attempts to escape any accountability, while accountability is a fundamental pillar for any solution and the need to end the dominant amnesty approach to political life for three decades. Actual accountability starts with enshrining the principle of judicial independence and enhancing its role in establishing real justice. 

"Lifting bank secrecy and revealing the identities of bank account holders are key to uncovering financial and non-financial crimes. Changing the leadership and governance of the central bank is crucial, as restructuring monetary policies and the banking sector cannot be done under the same management. This requires independence from the previous approach. Holding members of bank boards of directors, senior executives, and auditors responsible while waiting for investigation results is also necessary. Conducting an accounting and criminal audit of the Lebanese banking system, and revealing the links and processes between the Lebanese Central Bank and the banks are important steps," Kulluna Irada added.

Moreover, Kulluna Irada stressed the need to restructure the banking sector to address the banking gap and revive this sector while enhancing the central bank's ability to perform its functions. It is essential to distinguish between qualified and unqualified deposits in any compensation process based on the sources of these funds, whether they are clean or illegal funds. 

"Protecting deposits below $100,000 after transparent and rapid audit operations on the banks' assets and their actual value is crucial. The contribution of public funds in the process of restructuring the banking sector should not exceed the financial capacity of the general budget. Not tampering with state assets and public property to rescue the banking system is another crucial measure," Kulluna Irada added.

Finally, Kulluna Irada underlined the need to address the root cause of the economic dysfunction caused by corruption, the inefficiency of public administration, redundancy, political jobs in administration, in addition to smuggling, lack of control over land borders, laxity in public facilities, tax evasion, and absence of economic policies in favor of influential and monopolistic groups protected by the political class. 

"The economic crisis is ultimately part of the political crisis, and its severity increases as a result. Therefore, there is a need for a government with a genuine reformist and committed intention, which requires electing a new president for the republic and forming a government with a reform program to stop the crisis from rolling towards more dangerous areas," Kulluna Irada concluded.

The article is also available on LBCI's website here.

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