Antoine Farah wrote in “The Republic”:
The initial agreement between the Lebanese authorities and the International Monetary Fund stole the spotlight, and although some were disappointed with the amount of money that was allocated to implement an economic recovery plan, the problem, if any, does not lie in this particular point, but elsewhere.
There are many observations that can be made in the course of commenting on the initial agreement with the International Monetary Fund. However, there are basic headings that must be focused on, because they remain the valid basis for evaluating the results that this agreement may lead to. Answering these headlines-questions can lead to answering the most important question: Has the process of getting out of the crisis begun, or not?
In listing the notes on the sidelines of the agreement, and the way to reach it, the following points can be mentioned:
First – The IMF “waivered” some of the preconditions it had set for a preliminary agreement, including, for example, the adoption of the “Capital Control” law and the budget for the year 2022. The Fund decided to add these preconditions to the list of deferred conditions, meaning that it was satisfied with a promise from the authorities The Lebanese government will implement it later, before the Fund’s management approves the financing program. In explaining the reasons for this “concession”, it seems that the matter is related first to the Fund’s keenness, representing the (international community), to conclude an agreement with Lebanon at any cost to prevent the country’s complete collapse. This scene was similar to it in the CEDRE conference, when the French ambassador, Pierre Dukan, lowered the level of conditions to the point of only asking the Lebanese authorities to form an electricity regulator in exchange for starting to release the money. However, the Lebanese authorities did not implement this orphan demand. Secondly, because the Lebanese officials who met with the IMF delegation headed by Ernesto Ramirez Rigo, convinced him that the approval of “Capital Control” and the budget before the elections is impossible due to the popular opposition to some provisions of the two laws. Consequently, it becomes possible if the Fund grants an agreement in principle that will make the adoption of the two laws easier for the nominated representatives, because popular reactions will be more receptive to the situation in the presence of an agreement that might be the beginning of a solution to the crisis. By the way, Ramirez Rego told officials that what he sees in Lebanon is astonishing. The IMF used to discuss rescue programs, not “capital control” laws, because this step is often taken by countries facing crises before the IMF reaches them. While we in Lebanon spent a long time discussing this law that should have been imposed in the early days of the crisis in 2019.
Second – The details of the plan that the state pledged to implement in the context of obtaining funding is still ambiguous. Even the part related to the distribution of losses, which was leaked or leaked previously, and was subjected to a barrage of objections and criticism, it is not yet known whether it has been changed. Also, by the way, Ramirez Rigo was surprised that all economic sectors are not aware of the plan, while it is required to inform all segments of society regarding it in order to receive the ability and facilitate its approval without causing popular crises.
Third – Ramirez Rigo was astonished by the level of denial and indifference on the level of Lebanese officials regarding the depth and gravity of the crisis. Those who met them stated that the IMF, which always gives priority to combating corruption in any rescue plan, is convinced today that the priority in Lebanon should be for quick financial measures to stop the terrible decline, and then it can devote itself to the anti-corruption project.
Fourth – Through the preconditions set by the Fund for approving the financing program, which is of the EFF category, specialized in supporting countries that suffer from double crises in the balance of payments and in chronic structural deficits, the focus should be on the first item related to bank restructuring, which talks regarding protecting small depositors and reduce the use of public resources. This phrase probably means that the Fund is not in favor of the idea of the state actively participating in the process of bridging the financial gap. This confirms that the “big” depositors will pay a heavy price in the process of distributing losses. Thus, the government’s plan to pay deposits in installments for 15 or 20 years is likely to be unacceptable.
Fifth – The EFF financing programs The amount allocated to each country, in addition to the quota principle, is determined by two criteria: the economy’s need for recovery, and the ability of this economy to repay the loan and take off. Consequently, these two criteria explain why the approved amount is relatively modest, because the size of the Lebanese economy has become smaller, and because the depth of the structural crisis prevents this economy from being able to bear loans greater than those that were agreed upon. Consequently, if these negotiations had taken place at the beginning of the crisis, it would have been possible to obtain larger sums, because the economy in its previous condition, and through the reserve that was available, was able to take off and bear the repayment of larger loans.
