News / Lebanon

Lebanon approves economic rescue plan, eyes IMF aid

Thursday, 30 April 2020 5:47 PM [ Last Update: Thursday, 30 April 2020 5:47 PM ]

Lebanese Prime Minister Hassan Diab wearing gloves opens an envelope during a parliament meeting at the Unesco Palace in the capital Beirut, on April 21, 2020. (Photo by AFP)

Prime Minister Hassan Diab has said that Lebanon hopes to secure IMF aid based on a financial reform plan approved by the government to offset the impact of an ongoing acute economic crisis.

Diab told reporters after a cabinet session on Thursday that the plan would be used to launch negotiations via its financial adviser Lazard, a leading financial advisory and asset management firm, to restructure the sovereign debt.

"We will use this (plan)... to apply for an IMF program in light of which there will be negotiations," Diab said.

"If we get (IMF support), and God willing we will, it will help us to pass through this difficult economic phase which could be three, four or five years," he said. "The amount (the IMF will give) is up to negotiations."

The premier also said It would take six to nine months to be clear how much $31 billion of Eurobonds could be reduced.

The finalized reform plan approved by the government on Thursday was not immediately available.

Drafts of the plan have set out vast losses in the financial system, including projections of tens of billions of dollars of losses at the central bank and in the banking system.

Lebanon approves intl. financial, legal advisers: Source

Lebanon reportedly approves asset management company Lazard to restructure the country’s debts, in an attempt to alleviate its deepening economic crisis.

Lebanon defaulted on its sovereign debt last month for the first time. Its currency has shed more than half its value and savers have been largely shut out of their deposits since October.

Consumer goods prices in the import-dependent country have shot up by 50% since then.

An official source said the plan did not deal with the value of the Lebanese pound, still pegged at a rate of 1,507.5 to the dollar, even as it has slumped below 4,000 on a parallel market. Diab said the exchange rate was a matter for the central bank, not the government.

The crisis is rooted in decades of bad governance that landed Lebanon with one of the world's biggest public debt burdens.