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Lebanon: Salameh Hopes IMF Conditions Are Met to Secure Program

Lebanon: Salameh Hopes IMF Conditions Are Met to Secure Program

Friday, 8 April, 2022 - 07:15
A view shows the Central Bank building in Beirut, Lebanon. Reuters

Lebanese central bank governor Riad Salameh said on Friday he hoped prior conditions set by the International Monetary Fund (IMF) in a staff-level agreement with Lebanon would be met in order to secure IMF board approval of a program.

The IMF said on Thursday it had reached a draft funding agreement with Lebanon, but that Beirut needed to enact a batch of economic reforms before its board decides whether to approve the deal.

"We hope that the prior conditions set by the IMF are met in order to have a program approval by the board of the IMF," Salameh told Reuters via text message, describing the agreement as "a positive event for Lebanon".

"The agreement with the IMF will contribute to the unification of the exchange rate," Salameh said. The central bank had "cooperated and facilitated the mission", he said.

The IMF said there are “five key pillars” that should be implemented, including restructuring the financial sector and implementing fiscal reforms, along with the proposed restructuring of external public debt. They also include reforming state-owned enterprises, particularly in the electricity sector, and strengthening governance, anti-corruption, and anti-money laundering efforts.

The IMF also called for establishing a credible and transparent monetary and exchange rate system as there are several exchange rates for the Lebanese pound. It said that there should be parliament approval of a reformed bank secrecy law to bring it in line with international standards to fight corruption.

The IMF statement said there would be an “externally assisted bank-by-bank evaluation for the 14 largest banks” in Lebanon. Since the meltdown began, local banks have imposed informal capital controls and there have been concerns that depositors will lose part of their savings.

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