The Lebanese government will restart negotiations with the International Monetary Fund (IMF) while beginning reforms demanded by donors, according to a draft policy program that aims to tackle the country’s, as well as one of the worst financial meltdowns in history.
New Prime Minister Najib Mikati’s government will also resume negotiations with creditors over a restructuring of public debt on which Lebanon defaulted last year.
The government was agreed on Friday after more than a year of political conflict over seats in the cabinet that left the country adrift as more than three-quarters of the populace fell into poverty and shortages crippled normal life.
The cabinet is due to meet on Thursday to approve the draft, which will then go to a vote of confidence in parliament. Understanding the gravity of the situation, the policy program was drawn up in a matter of days, much faster than the weeks the process has taken in the past.
The draft said that the government was dedicated to resuming talks with the IMF on a short-and medium-term support plan.
Donors want to see Lebanon ratify reforms, including measures to curb the corruption and graft that led to the economic collapse, before they will unlock billions of dollars of assistance already set for the country.
Talks with the IMF broke down last summer when Lebanon’s political elite and banking sector objected to the scale of financial losses set out in a recovery plan drawn up by the previous government.
The draft program said the Mikati government would renew and develop the previous financial recovery plan, which set out a shortfall in the financial system of some $90 billion, a figure endorsed by the IMF.
The government will also draw up a plan to resolve the poor situation of the banking sector, which has been paralyzed since late 2019, the draft stated.