Lebanon’s PM Says IMF Talks Progressing Well

FILE PHOTO: Lebanese Prime Minister Najib Mikati speaks during an interview with Reuters at the government palace in Beirut, Lebanon October 14, 2021. REUTERS/Mohamed Azakir
FILE PHOTO: Lebanese Prime Minister Najib Mikati speaks during an interview with Reuters at the government palace in Beirut, Lebanon October 14, 2021. REUTERS/Mohamed Azakir
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Lebanon’s PM Says IMF Talks Progressing Well

FILE PHOTO: Lebanese Prime Minister Najib Mikati speaks during an interview with Reuters at the government palace in Beirut, Lebanon October 14, 2021. REUTERS/Mohamed Azakir
FILE PHOTO: Lebanese Prime Minister Najib Mikati speaks during an interview with Reuters at the government palace in Beirut, Lebanon October 14, 2021. REUTERS/Mohamed Azakir

Lebanon’s Prime Minister Najib Mikati said on Monday that preliminary talks with the International Monetary Fund were advancing well and a revised financial recovery plan would be complete by the end of November.

“For the first time we have handed over unified financial figures,” Mikati told an economy conference in Beirut. “We hope we will have a letter of intent soon.”

Talks with the IMF that aimed to secure financial support broke down last year amid disagreements over the scale of losses in the country’s financial sector that collapsed in late 2019, Reuters reported.

The central bank, private banks and a parliamentary committee representing major political parties argued that losses were much smaller than the roughly $83 billion estimated by the plan, despite the IMF viewing the figures as accurate.

Mikati said the central bank was now “cooperating fully” with Lazard, the advisor that helped draw up the previous plan, adding that the updated version would be ready this month.

Economists see an IMF program as the only way for Lebanon to unlock international aid and begin recovering from one of the world’s worst financial crises.

The economic meltdown has translated into severe shortages of basic goods including fuel and medication.

Mikati said Lebanon was seeking to increase electricity output from a current five hours per day to between 10 and 15 hours per day by the end of the year through a series of deals with Iraq, Egypt and Jordan.

Lebanon’s ailing electricity sector constitutes a main drain on state finances, costing taxpayers more than $40 billion since 1992 even though the state never provided round-the-clock power.

In addition to monthly shipments of 75,000 tonnes of crude oil from Iraq that provide about five hours a day of power, Mikati said Lebanon aimed to secure Egyptian gas to produce an additional four hours of power by the end of the year.

He said Jordan was willing to provide about two hours worth of power for a cost of 12 cents per kilowatt hour (kWh), and work was underway on a long-term plan to secure 24/7 electricity.

While Mikati struck an optimistic tone, his government has not met for nearly a month due to a row over the probe into the deadly August 2020 Beirut port blast and will lose decision-making powers after elections scheduled for spring next year.

Mikati said “no-one can prevent the holding of elections,” before parliament’s mandate ends on May 21.



ECB's Lagarde Renews Integration Call as Trade War Looms

FILE PHOTO: European Central Bank President Christine Lagarde and Governor of the Bank of Finland Olli Rehn arrive at the non-monetary policy meeting of the ECB's Governing Council in Inari, Finnish Lapland, Finland February 22, 2023. Lehtikuva/Tarmo Lehtosalo via REUTERS//File Photo
FILE PHOTO: European Central Bank President Christine Lagarde and Governor of the Bank of Finland Olli Rehn arrive at the non-monetary policy meeting of the ECB's Governing Council in Inari, Finnish Lapland, Finland February 22, 2023. Lehtikuva/Tarmo Lehtosalo via REUTERS//File Photo
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ECB's Lagarde Renews Integration Call as Trade War Looms

FILE PHOTO: European Central Bank President Christine Lagarde and Governor of the Bank of Finland Olli Rehn arrive at the non-monetary policy meeting of the ECB's Governing Council in Inari, Finnish Lapland, Finland February 22, 2023. Lehtikuva/Tarmo Lehtosalo via REUTERS//File Photo
FILE PHOTO: European Central Bank President Christine Lagarde and Governor of the Bank of Finland Olli Rehn arrive at the non-monetary policy meeting of the ECB's Governing Council in Inari, Finnish Lapland, Finland February 22, 2023. Lehtikuva/Tarmo Lehtosalo via REUTERS//File Photo

European Central Bank President Christine Lagarde renewed her call for economic integration across Europe on Friday, arguing that intensifying global trade tensions and a growing technology gap with the United States create fresh urgency for action.
US President-elect Donald Trump has promised to impose tariffs on most if not all imports and said Europe would pay a heavy price for having run a large trade surplus with the US for decades.
"The geopolitical environment has also become less favorable, with growing threats to free trade from all corners of the world," Lagarde said in a speech, without directly referring to Trump.
"The urgency to integrate our capital markets has risen."
While Europe has made some progress, EU members tend to water down most proposals to protect vested national interests to the detriment of the bloc as a whole, Reuters quoted Lagarde as saying.
But this is taking hundreds of billions if not trillions of euros out of the economy as households are holding 11.5 trillion euros in cash and deposits, and much of this is not making its way to the firms that need the funding.
"If EU households were to align their deposit-to-financial assets ratio with that of US households, a stock of up to 8 trillion euros could be redirected into long-term, market-based investments – or a flow of around 350 billion euros annually," Lagarde said.
When the cash actually enters the capital market, it often stays within national borders or leaves for the US in hope of better returns, Lagarde added.
Europe therefore needs to reduce the cost of investing in capital markets and must make the regulatory regime easier for cash to flow to places where it is needed the most.
A solution might be to create an EU-wide regulatory regime on top of the 27 national rules and certain issuers could then opt into this framework.
"To bypass the cumbersome process of regulatory harmonization, we could envisage a 28th regime for issuers of securities," Lagarde said. "They would benefit from a unified corporate and securities law, facilitating cross-border placement, holding and settlement."
Still, that would not solve the problem that few innovative companies set up shop in Europe, partly due to the lack of funding. So Europe must make it easier for investment to flow into venture capital and for banks to fund startups, she said.