Lebanon Says It’s In Contact With IMF Over Proposed Rescue Plan
Lebanon Says It’s In Contact With IMF Over Proposed Rescue Plan
(Bloomberg) -- Lebanon has reached out to the International Monetary Fund to discuss its draft economic-rescue plan in the hope of getting aid after defaulting on its debt, Prime Minister Hassan Diab said.
“The finance ministry initiated contact with the IMF, from which we have positive feedback on the financial plan, taking into consideration first and foremost the interest of the Lebanese,” he said in a televised speech.
Lebanon’s government is discussing a program to revive its ailing economy and restructure its debt as well as its banks. The proposed reforms will require financing from the IMF and other countries and institutions, according to a draft seen by Bloomberg last week.
The government last month defaulted on a Eurobond for the first time in its history and has set about trying to overhaul its entire debt stock of $90 billion and engage in talks with bondholders, including local banks and international funds.
The prospect of an IMF bailout is controversial in Lebanon, with some politicians fearing the Washington-based lender would impose harsh austerity measures or political conditions on a country that is already seeing salaries fall, unemployment rise and inflation soar. The economy is expected to shrink 12% this year, which would be one of the worst performances globally, according to the IMF.
The plan sets out a five-year road-map to boost growth to 2% by 2024 and requires $10 to $15 billion.
“After in-depth studies, and based on figures from the end of February 2020, I can announce today that the percentage of those who will not be affected will not be less than 98% of the depositors,” the premier said.
This indicates a change from the draft plan, which anticipated 90% of banking depositors would be excluded from any haircut. Lebanese officials have previously said that the largest depositors should take the biggest hit.
The government forecasts its debt burden will drop to 92% of gross domestic product this year from its current level of 176%, implying it expects to have completed its restructuring by the end of 2020.
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