Lebanon’s Finance Minister Yaacine Jaber Seeks IMF Expert-Level Agreement in Washington

IMF talks resume in Washington

Lebanon’s Finance Minister Yaacine (Yacine) Jaber said on Monday, September 28, that Lebanon hopes to reach a new expert-level agreement with the International Monetary Fund, a step that would pave the way for launching a full program with the Fund. Jaber said enacting a final law to address the losses from the financial crisis remains necessary before the program can be completed, and he headed to Washington on Monday to meet IMF Managing Director Kristalina Georgieva. The Lebanese ministerial delegation, led by Prime Minister Nawaf Salam, began meetings in Washington with senior officials at the World Bank Group and the IMF, with the visit focused on supporting reform paths and strengthening cooperation with the two institutions.

Jaber said Lebanon has completed an important phase of reforms after approving the banking restructuring law, and he framed the move as a message to the IMF and the international community about the seriousness of the government and parliament in implementing reforms. The IMF mission’s latest visit to Lebanon, from September 15 to 18, welcomed amendments to the Banking Sector Reform and Regulation Law, while stressing the need to continue work on the Financial Stability Law and the recovery of deposits in line with international standards.

Financial gap law is the hurdle

Yassine Jaber said reaching a full program with the IMF will require enacting the financial gap law, the legislation aimed at determining how losses from the collapse of the Lebanese financial system are distributed. Jaber said the government estimated losses in 2022 at about $70 billion, and he described the law as determining how losses are distributed among the state, Banque du Liban, commercial banks, and depositors so funds can be returned to frozen depositors gradually. The IMF emphasized the importance of respecting creditor seniority so that depositors do not bear losses before shareholders and junior creditors, and it stressed that the bank restructuring system must be sustainable and compatible with fiscal and debt sustainability.

Jaber said the government had reached an expert-level agreement with the IMF in April 2022 on a 46-month financing program worth about $3 billion, but it did not take effect after Lebanon stalled in implementing required reforms before the IMF Board of Directors approved. The IMF confirmed in September that negotiations with Lebanese authorities were continuing on a comprehensive reform agenda that could be supported by an IMF financing arrangement.

No full signing yet

Finance Minister Yassin Jaber told L’Orient Today that “Nothing will be signed this Monday, even though we are working for it to happen in the near future,” as the Lebanese delegation began meetings in Washington on Sept. 28.

Jaber said the current phase aims to activate the IMF agreement path and strive to advance toward an agreement at the staff level as a preliminary step before reaching a comprehensive program with the Fund.

Jaber said he will participate in the delegation alongside the Energy Minister, and he described the Washington meetings as including a meeting with IMF Managing Director Kristalina Georgieva plus meetings with the World Bank to discuss several files and major projects, especially in the energy sector.

Jaber said passing the law restructuring the banking sector sent a message to the IMF and the international community that the government and the Parliament are serious about moving forward with reforms.

Jaber said, “We may not be signing a full program with the IMF today, but what matters is starting the step that paves the way for that, and clearly defining what has been achieved and what the next steps are.”

Reporting for this sectionToday