IMF Needs New Lebanese Government To Regulate Banking And Finance Sector
Lebanon– As a final act to save the democracy, Lebanon has approved a new recovery plan, which ofcourse needs the support of the parliament. The cabinet approved the plan before taking on the caretaker government, but this will definitely need complete go ahead by the new parliament.
This has been done primarily on the behest of the International Monetary Fund in order if Lebanon genuinely seeks to secure financial relief. Lebanon has suffered a three-year long stalemate when it comes to economic growth. Its economy has been hanging by loose strings depending solely on outside funds.
Last month, the IMF entered into a staff agreement with the Lebanese government, to come up with a concrete workable plan if it really wanted financial help. Along with this, what IMF needs is a complete restructuring the banking sector and amending decades-old banking secrecy laws.
The IMF and the international community have demanded that Lebanon implement wide-ranging economic and financial reforms in order to release loans and investments worth billions of dollars.
The new plan will not go without a full audit of the Banque Du Liban central bank’s forex financial standing by July. Then, the government “will cancel, at the outset, a large part of the central bank’s foreign currency obligations to banks in order to reduce the deficit in BDL’s capital,” according to a document shared by a leading British daily. The largest 14 commercial banks, representing 83 per cent of total assets, would also be audited. Viable banks would be recapitalised with “significant contributions” from bank shareholders and large depositors.
The document also said the government would unify the official exchange rate, ending a system in which, the government offered various exchange rates for different operations. Lebanon’s local currency has lost more than 90 per cent of its value since its economic decline began in 2019. “The challenges that our country is facing demand a strong administration and co-operation between all sides,” Prime Minister Najib Mikati said. “Every day that passes will cost more if we don’t implement the economic recovery plan in full.”