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IMF Says Lebanon Should Develop Strategy to Allocate Losses of Banking Sector

Lebanese Prime Minister Nawaf Salam meets IMF mission chief Ernesto Ramirez Rigo in Beirut (NNA)
Lebanese Prime Minister Nawaf Salam meets IMF mission chief Ernesto Ramirez Rigo in Beirut (NNA)
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IMF Says Lebanon Should Develop Strategy to Allocate Losses of Banking Sector

Lebanese Prime Minister Nawaf Salam meets IMF mission chief Ernesto Ramirez Rigo in Beirut (NNA)
Lebanese Prime Minister Nawaf Salam meets IMF mission chief Ernesto Ramirez Rigo in Beirut (NNA)

The International Monetary Fund (IMF) on Friday said Lebanon’s economy shows resilience despite the significant impact of the regional conflict.

But the Fund called on Lebanon to strengthen its newly passed banking resolution law and adopt a more ambitious 2026 government budget, as the country seeks to stabilize its economy and unlock international financial support.

“The recent approval of the Bank Resolution Law reflects the dedicated efforts of all stakeholders, though the legislation needs further refinement,” IMF mission chief Ernesto Ramirez Rigo said in a statement.

An IMF mission, led by Rigo, concluded on Thursday a four-day visit to Beirut where it discussed with authorities their policy and reforms strategy, mainly on the banking sector and the 2026 government budget.

“Lebanon’s economy shows resilience despite the significant impact of the regional conflict, and is recently experiencing a partial economic rebound on the back of strong diaspora tourism,” Rigo said in the statement.

He noted that the Lebanese authorities have correctly maintained a tight fiscal and monetary stance, accumulating some additional international reserves and keeping a small fiscal surplus.

Rigo’s team welcomed the long-awaited establishment of regulatory authorities in the electricity and telecommunications sectors, the rebuild of statistical capacities at the fiscal level and the strengthening of digital processes for tax compliance.

However, the IMF said restoring strong and sustainable growth requires implementing ambitious and comprehensive reforms to tackle the structural weaknesses that have been hampering Lebanon’s potential for years.

“They are also needed to attract international support to help the country rebuild its economy and reconstruct the war-devastated areas,” it said.

Against this backdrop, the mission focused primarily on the authorities’ efforts to rehabilitate the banking sector and the 2026 government budget.

It said the authorities have made progress in developing a strategy to address the severe banking sector challenges.

“The recent approval of the Bank Resolution Law reflects the dedicated efforts of all stakeholders, though the legislation needs further refinement,” the Fund noted, adding that its team has suggested amendments to fully align it with international standards and ensure the effectiveness of bank restructuring processes.

It also said the authorities should continue working to develop the strategy to recognize and allocate losses, and restore the viability of the banking sector consistent with international standards, protection of small depositors, and sustainability of public debt.

Concerning the 2026 government budget, the IMF team expected a more ambitious approach than in the draft approved by the cabinet.

On the revenue side, the government has rightly envisaged measures to broaden the tax base and improve compliance, it said. However, the team added, tax policy reforms should also be considered to create fiscal space for priority spending on reconstruction and social protection.

It said the retraction of excise taxes on fuel poses “serious concerns” regarding the ability of the government to finance its spending.

On the expenditure side, all expected items should be transparently recorded, including those externally financed, it added.

Overall, the IMF noted, spending decisions need to be consistent with available financing.

The mission also called for stepping up efforts toward the adoption of an ambitious medium-term fiscal framework, which is necessary for developing a credible strategy to restore fiscal and debt sustainability.

“The mission looks forward to continuing discussions with the authorities on these issues, including during the upcoming IMF Annual Meetings (next October),” it said, reiterating its commitment to supporting Lebanon in its endeavor to develop and implement a comprehensive economic reform program, in a manner consistent with its policies and mandate.

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Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
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Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).

Harvard University economics professor Pol Antràs said Saudi Arabia represents an exceptional model in the shifting global trade landscape, differing fundamentally from traditional emerging-market frameworks. He also stressed that globalization has not ended but has instead re-formed into what he describes as fragmented integration.

Speaking to Asharq Al-Awsat on the sidelines of the AlUla Conference for Emerging Market Economies, Antràs said Saudi Arabia’s Vision-driven structural reforms position the Kingdom to benefit from the ongoing phase of fragmented integration, adding that the country’s strategic focus on logistics transformation and artificial intelligence constitutes a key engine for sustainable growth that extends beyond the volatility of global crises.

Antràs, the Robert G. Ory Professor of Economics at Harvard University, is one of the leading contemporary theorists of international trade. His research, which reshaped understanding of global value chains, focuses on how firms organize cross-border production and how regulation and technological change influence global trade flows and corporate decision-making.

He said conventional classifications of economies often obscure important structural differences, noting that the term emerging markets groups together countries with widely divergent industrial bases. Economies that depend heavily on manufacturing exports rely critically on market access and trade integration and therefore face stronger competitive pressures from Chinese exports that are increasingly shifting toward alternative markets.

Saudi Arabia, by contrast, exports extensively while facing limited direct competition from China in its primary export commodity, a situation that creates a strategic opportunity. The current environment allows the Kingdom to obtain imports from China at lower cost and access a broader range of goods that previously flowed largely toward the United States market.

Addressing how emerging economies should respond to dumping pressures and rising competition, Antràs said countries should minimize protectionist tendencies and instead position themselves as committed participants in the multilateral trading system, allowing foreign producers to access domestic markets while encouraging domestic firms to expand internationally.

He noted that although Chinese dumping presents concerns for countries with manufacturing sectors that compete directly with Chinese production, the risk is lower for Saudi Arabia because it does not maintain a large manufacturing base that overlaps directly with Chinese exports. Lower-cost imports could benefit Saudi consumers, while targeted policy tools such as credit programs, subsidies, and support for firms seeking to redesign and upgrade business models represent more effective responses than broad protectionist measures.

Globalization has not ended

Antràs said globalization continues but through more complex structures, with trade agreements increasingly negotiated through diverse arrangements rather than relying primarily on multilateral negotiations. Trade deals will continue to be concluded, but they are likely to become more complex, with uncertainty remaining a defining feature of the global trading environment.

Interest rates and artificial intelligence

According to Antràs, high global interest rates, combined with the additional risk premiums faced by emerging markets, are constraining investment, particularly in sectors that require export financing, capital expenditure, and continuous quality upgrading.

However, he noted that elevated interest rates partly reflect expectations of stronger long-term growth driven by artificial intelligence and broader technological transformation.

He also said if those growth expectations materialize, productivity gains could enable small and medium-sized enterprises to forecast demand more accurately and identify previously untapped markets, partially offsetting the negative effects of higher borrowing costs.

Employment concerns and the role of government

The Harvard professor warned that labor markets face a dual challenge stemming from intensified Chinese export competition and accelerating job automation driven by artificial intelligence, developments that could lead to significant disruptions, particularly among younger workers. He said governments must adopt proactive strategies requiring substantial fiscal resources to mitigate near-term labor-market shocks.

According to Antràs, productivity growth remains the central condition for success: if new technologies deliver the anticipated productivity gains, governments will gain the fiscal space needed to compensate affected groups and retrain the workforce, achieving a balance between addressing short-term disruptions and investing in long-term strategic gains.

Business

Aljadaan: Emerging Markets Account for 70% of Global Growth

Al-Jadaan speaking to the attendees at the "AlUla Conference for Emerging Market Economies" (Asharq Al-Awsat
Al-Jadaan speaking to the attendees at the "AlUla Conference for Emerging Market Economies" (Asharq Al-Awsat
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Aljadaan: Emerging Markets Account for 70% of Global Growth

Al-Jadaan speaking to the attendees at the "AlUla Conference for Emerging Market Economies" (Asharq Al-Awsat
Al-Jadaan speaking to the attendees at the "AlUla Conference for Emerging Market Economies" (Asharq Al-Awsat

Saudi Minister of Finance Mohammed Aljadaan stressed Sunday that the world economy is going through a “profound transition,” saying emerging markets and developing economies now account for nearly 60 percent of the global Gross Domestic Product (GDP) in purchasing power terms and over 70 percent of global growth.

In his opening remarks at the AlUla Conference for Emerging Market Economies, organized by the Saudi Ministry of Finance and the IMF in AlUla, the minister said these economies have become an increasingly important driver of global growth with their share of global economy more than doubling since 2010.

“Today, the 10 emerging economies in the G20 alone account for more than half of the world growth. Yet, they face a more complex and fragmented environment, elevated debt levels, slower trade growth and increasing exposure to geopolitical shocks.”

“Unfortunately, more than half of low income countries are either in or at the risk of debt distress. At the same time global trade growth has slowed at around half of what it was pre the pandemic,” Aljadaan added.

The Finance Minister stressed that the Saudi experience over the past decade has reinforced three lessons that may be relevant to the discussions at the two-day conference, which brings together a select group of ministers and central bank governors, leaders of international organizations, leading investors and academics.

“First, macroeconomic stability is not the enemy of growth. It is actually the foundation,” he said.

“Structural reforms deliver results only when institutions deliver. So there is no point of reforming ... if the institutions are unable to deliver,” he stated.

Finally, he said that “international cooperation matters more, not less, in a fragmented world.”

Business

Georgieva from AlUla: Growth Still Lacks Pre-pandemic Levels

Kristalina Georgieva speaking to attendees at the second edition of the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat)
Kristalina Georgieva speaking to attendees at the second edition of the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat)
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Georgieva from AlUla: Growth Still Lacks Pre-pandemic Levels

Kristalina Georgieva speaking to attendees at the second edition of the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat)
Kristalina Georgieva speaking to attendees at the second edition of the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat)

International Monetary Fund (IMF) Managing Director Kristalina Georgieva said Sunday that world growth still lacks pre-pandemic levels, expressing concern as she expected more shocks amid high spending and rising debt levels in many countries.

Georgieva spoke at the AlUla Conference for Emerging Market Economies, organized by the Saudi Ministry of Finance and the IMF in AlUla.

The two-day conference brings together a select group of ministers and central bank governors, leaders of international organizations, leading investors and academics to deliberate on policies to global stability, prosperity, and multilateral collaboration.

Georgieva said that the conference was launched last year in recognition of the growing role of emerging market economies in a world of sweeping transformations.

“I came out of this gathering .... With a sense of hope for the pragmatic attitude and determination to pursue good policies and build strong institutions,” she said.

Georgieva stressed that “good policies pay off,” and said that growth rates across emerging economies reached four percent this year, exceeding by a large margin those of advanced economies that are around 1.5 percent.