Asharq Al-awsat English Middle-east and International News and Opinion from Asharq Al-awsat Newspaper

Lebanese Finance Official in IMF Talks Resigns Post

Lebanese Finance Official in IMF Talks Resigns Post

Monday, 29 June, 2020 - 10:15
A senior member of Lebanon's negotiating team with the IMF has quit his post as finance ministry director general. (Reuters)

A senior member of Lebanon’s negotiating team with the IMF resigned as finance ministry director general on Monday, saying vested interests were undermining the government’s economic recovery plan.

Alain Bifani, who held the ministry post for 20 years, is the second member of Lebanon’s team at the International Monetary Fund talks to quit this month.

His resignation underlines the obstacles facing the talks, which Lebanon entered in May, seeking help to tackle a financial crisis widely seen as the biggest threat to its stability since the 1975-90 civil war.

The government’s draft rescue plan has served as the cornerstone of the talks with the IMF and maps out massive losses in the financial system, which Bifani said stood at $61 billion.

But the talks have been bogged down by a row between the government and the central bank over the scale of losses and how they should be shared.

Bifani told a news conference on Monday that a “criminal campaign” was threatening to thwart the plan.

“They denied the numbers even though everyone knows the numbers are correct,” he said, without naming names.

Bifani said the dispute was wasting time and costing Lebanon credibility as foreign reserves dwindled further. He said the negotiations were not dead but required a different approach.

He accused those with “interests” of trying to make the Lebanese public pay for losses as the local currency collapses and prices soar.

The Fund has said the government’s figures appear to be roughly the correct order of magnitude but that Beirut needs to reach a common understanding to move forward.

The numbers have been challenged by the central bank, the banking sector and a parliamentary committee that has cast doubt on the losses and assumptions.

Earlier this month, financial adviser Henri Chaoul also quit Lebanon’s IMF team, saying politicians, monetary authorities, and the financial sector were “opting to dismiss the magnitude” of losses and embark on a “populist agenda”.

IMF Managing Director Kristalina Georgieva said last week that she could not yet foresee a breakthrough in negotiations with Lebanon to help resolve the crisis.

Despite the spiraling crisis that has significantly weakened Lebanon’s government, it has not taken any concrete steps in fighting corruption or started the badly needed reforms that the IMF and donor countries are demanding to help get the country back on track.

The economic and financial crisis has seen the local currency lose more than 80% of its value against the US dollar in recent months amid soaring prices and popular unrest.

Lebanese banks sought on Monday to encourage depositors to withdraw trapped dollar savings in Lebanese pounds by increasing their exchange rate, as the national currency continued its tumble on the black market.

Banks have gradually restricted dollar transfers abroad and withdrawals since last year, effectively trapping dollar savings in accounts unless their owners want to convert them into Lebanese pounds.

Several banks said on Monday they had increased their buying rate from 3,000 to 3,850 pounds to the greenback.

Economist Jad Chaaban said banks adopting the new exchange rate Monday was part of a "strategy of converting more deposits to the Lebanese pound" as foreign currency becomes scarce, he said.

"The central bank is just printing currency to cover for any shortages in foreign currency, which is a huge mistake" as it will simply lead to more inflation, he said.

Editor Picks