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Lebanon: Govt Seen Backtracking from FX Move

Lebanese pound banknotes are pictured at a currency exchange shop in Beirut, Lebanon, January 5, 2022. REUTERS/Mohamed Azakir
Lebanese pound banknotes are pictured at a currency exchange shop in Beirut, Lebanon, January 5, 2022. REUTERS/Mohamed Azakir
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Lebanon: Govt Seen Backtracking from FX Move

Lebanese pound banknotes are pictured at a currency exchange shop in Beirut, Lebanon, January 5, 2022. REUTERS/Mohamed Azakir
Lebanese pound banknotes are pictured at a currency exchange shop in Beirut, Lebanon, January 5, 2022. REUTERS/Mohamed Azakir

The Lebanese finance ministry seemed on Thursday backing away from a Nov. 1 start date to slash the official exchange rate.

The ministry said on Wednesday the official exchange rate of 1,507 pounds per dollar would be replaced with one of 15,000, calling this a step towards unifying multiple rates that have emerged during Lebanon's three-year long financial crisis.

But after declaring a Nov. 1 implementation date, the ministry later linked the step to approval of a financial recovery plan, the latest version of which is being discussed in parliament.

Some economists and politicians saw this as a government retreat: the recovery plan, which must address a $72 billion hole in the national finances, has been in dispute since 2019.

The pound's market value currently stands at 38,000 to the dollar, a devaluation of more than 95% since Lebanon collapsed into a financial crisis that has plunged swathes of the population into poverty.

Finance Minister Youssef Khalil could not be reached for comment. In a Reuters interview on Wednesday, he said the change was agreed with the central bank and would be discussed with stakeholders over the next month before implementation.

Ibrahim Kanaan, a senior lawmaker in President Michel Aoun's Free Patriotic Movement, told Reuters amending the official rate was necessary "but not in this way".

"I want to check if he will follow through on this or has to amend it a bit, because you cant do it this way," he said.

A finance ministry official referred Reuters to a statement late on Wednesday that said the move to a new official exchange rate was "conditioned on the approval of the recovery plan that is being worked on, and which should accompany that step".

Central bank governor Riad Salameh, in a text message to Reuters late on Wednesday, said implementing the decision "will require time", without elaborating.

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IMF Policy Committee Underscores Trade Risks to Global Economy, Commits to Fund’s Role

International Monetary Fund (IMF) Managing Director Kristalina Georgieva, right, and International Monetary and Financial Committee (IMFC) chair Saudi Arabia's Finance Minister Mohammed Al-Jadaan speak during a news conference after the International Monetary and Financial Committee (IMFC) meeting, during the World Bank/IMF Spring Meetings at the International Monetary Fund (IMF) headquarters in Washington, Friday, April 25, 2025. (AP)
International Monetary Fund (IMF) Managing Director Kristalina Georgieva, right, and International Monetary and Financial Committee (IMFC) chair Saudi Arabia's Finance Minister Mohammed Al-Jadaan speak during a news conference after the International Monetary and Financial Committee (IMFC) meeting, during the World Bank/IMF Spring Meetings at the International Monetary Fund (IMF) headquarters in Washington, Friday, April 25, 2025. (AP)
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IMF Policy Committee Underscores Trade Risks to Global Economy, Commits to Fund’s Role

International Monetary Fund (IMF) Managing Director Kristalina Georgieva, right, and International Monetary and Financial Committee (IMFC) chair Saudi Arabia's Finance Minister Mohammed Al-Jadaan speak during a news conference after the International Monetary and Financial Committee (IMFC) meeting, during the World Bank/IMF Spring Meetings at the International Monetary Fund (IMF) headquarters in Washington, Friday, April 25, 2025. (AP)
International Monetary Fund (IMF) Managing Director Kristalina Georgieva, right, and International Monetary and Financial Committee (IMFC) chair Saudi Arabia's Finance Minister Mohammed Al-Jadaan speak during a news conference after the International Monetary and Financial Committee (IMFC) meeting, during the World Bank/IMF Spring Meetings at the International Monetary Fund (IMF) headquarters in Washington, Friday, April 25, 2025. (AP)

International Monetary Fund member countries said on Friday that rising trade tensions were sapping growth and fueling uncertainty as well as market and financial stability risks, but reaffirmed their commitment to the institution as critical to helping countries navigate a difficult environment.

In a chair's statement, the IMF's steering committee also reaffirmed prior foreign exchange commitments and voiced support for a realignment of quotas, or shareholding, that better reflects countries' positions in the global economy.

"The world economy is at a pivotal juncture," the International Monetary and Financial Committee (IMFC) said in a statement as the spring meetings of the IMF and World Bank drew to a close. "Following several years of rising concerns over trade, trade tensions have abruptly soared, fueling elevated uncertainty, market volatility, and risks to growth and financial stability."

The message comes at the end of a tense week for policymakers and investors anxious about US President Donald Trump's moves to upend global trade and his commitment to international institutions.

The IMF on Tuesday slashed its economic forecasts for the US, China and most countries, citing the impact of US tariffs now at 100-year highs and warning that rising trade strife would further slow growth. It forecast global growth of 2.8% for 2025, down half a percentage point from its January forecast.

Saudi Arabia's Finance Minister Mohammed Al-Jadaan, who chairs the International Monetary and Financial Committee (IMFC), said the Fund must continue to focus on its core mandates, including expanding trade and growth.

"Addressing global debt vulnerabilities remains a priority for our members, especially for low-income and vulnerable countries," Al-Jadaan told a news conference in Washington.

IMF Managing Director Kristalina Georgieva acknowledged that the raft of current geopolitical flare-ups, especially Trump's push to redesign world trade with a barrage of tariffs, had distracted from discussions about other pressing challenges, including artificial intelligence, in public and behind closed doors.

She said it was encouraging that members had been able to engage in open conversations and share their views "in a fair space," but said she didn't want to minimize the discord.

"I don't want to sugarcoat - we still have quite a challenging time," she said at the news briefing.

Gathering members to talk about Syria had also given a new sense of urgency and purpose to turning a place of conflict into a stable and economically successful country benefiting the region and the world, Al-Jadaan said.

"It is not just about the money, it's about the work that I and other partners can deliver and capacity development, quality data and timely advice."

Al-Jadaan said trade had been the overriding concern during the meetings but he remained optimistic that solutions could be found after a week of candid and frank discussions.

"Actually today, we are holding in a lot better position than when we started the week. People understand the consequences and are working together in a constructive way to resolve tensions," he said.