Lebanon starts talks with IMF for financial aid

Lebanese government is after $10bn in support for economic rescue plan

Lebanon reached out to the IMF in the middle of its worst economic crisis in three decades. AFP 

Lebanon on Wednesday entered talks with the International Monetary Fund aimed at securing aid to rescue a crumbling economy, the finance ministry said.

Lebanon is battling its worst economic crisis since the 1975-1990 civil war. The sutuation has worsened with a coronavirus lockdown.

The country, which last autumn was hit by protests, asked the IMF for financial assistance on May 1 after producing a much-awaited financial rescue plan.

"The Lebanese government and the IMF wrapped up their first stage of discussions towards trying to reach a deal to set the Lebanese economy back on the right path," Finance Minister Ghazi Wazni said.

"We are satisfied with the atmosphere of these initial talks and hope the next ones will be just as constructive."

Under the rescue plan, the government will seek more than $10 billion (Dh36.7bn) from the IMF, on top of $11bn in grants and loans pledged by international donors in 2018.

President Michel Aoun said financial aid from the IMF was "mandatory" for an economic recovery.

The country's currency has plummeted in value on the grey market in recent weeks, and some 45 per cent of the population now live in poverty.

The rescue plan aims to reduce the deficit, restructure a colossal debt and reorganise an oversized banking sector.

Lebanon is one of the most indebted countries worldwide with a debt equal to 170 per cent of its gross domestic product. It defaulted on a repayment for the first time in March.

The country is also in the grip of a severe liquidity crunch, with depositors unable to make transfers abroad or withdraw US dollars, which are used alongside the pound.

Coronavirus in Lebanon