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IMF Names Resident Representative for Lebanon to Continue Reform Talks

IMF Names Resident Representative for Lebanon to Continue Reform Talks

Thursday, 9 June, 2022 - 17:00
A general view shows buildings and the grain silo damaged during the 2020 Beirut port explosion, in Beirut, Lebanon May 17, 2022. REUTERS/Emilie Madi

The International Monetary Fund (IMF) has picked a resident representative for Lebanon, the multilateral lender's spokesman Gerry Rice said on Thursday.

Rice, who did not specify who had been named for the position, added the IMF will continue its talks on an economic reform program with the country.

The IMF reached a staff-level agreement with Lebanon for a four-year Extended Fund Facility (EFF) in April. The program is still pending the IMF executive board's approval, which could only come following a series of reforms.

Lebanon's caretaker Deputy Prime Minister Saade Shami, who has been negotiating with the IMF, hailed it as a "good move."

"The government accepted immediately when it was asked. He will be meeting with all the officials almost on a weekly basis and to report back to Washington," Shami told Reuters, without confirming the identity of the representative.

He said the representative, who would arrive in Lebanon this month, would also provide technical support.

Lebanon's banks should "go first" in absorbing losses stemming from the country's financial collapse through their capital, Shami also said, denying the state would rely on a sovereign fund or gold reserves to reimburse depositors who had lost their savings.

Shami is the architect behind a recovery roadmap that Lebanon's cabinet passed just before it went into caretaker status last month and which includes several measures that are required to unlock relief funding from the IMF.

It includes a full audit of the Central Bank's forex financial standing by consultancy firm KPMG in the next two months and a subsequent write-off of a "large part" of its foreign currency obligations to banks.

The Associations of the Banks of Lebanon has rejected the plan, saying it would force depositors and banks to bear the brunt of $72 billion in estimated losses.

Shami stood his ground on Thursday, telling Reuters that "banks should go first in terms of their capital before we can touch any depositors".

"We are not going to do a Robin Hood principle in reverse, taking from the poorer to give to the richer – this is not acceptable," he said, calling on banks to "make sacrifices" to protect depositors.

Shami said the government would aim to return up to $100,000 of depositors' savings over time, which he said Lebanon's banks had the foreign currency assets to cover through "reserves of the central bank, liquidity in the banking system, deposits of correspondent banks, loans to the private sector, among other things".

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