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    Home»News»Lebanon News
    2 Mins Read

    Everything You Need To Know About IMF’s Bailout Plan For Lebanon

    By Omar JamalMarch 4, 2020Updated:July 19, 2021
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    The IMF deal for Lebanon’s bailout is arising as an alternative to the imminent economic collapse of Lebanon.

    While economy experts are saying that it is Lebanon’s only hope, Hezbollah and its allies are adamantly against it because they believe that the austerity measures proposed by the IMF will cause public unrest. 

    However, experts suggested that the solution is way more practical than trying to restructure our debt. 

    IMF

    So what are the terms of the IMF’s agreement that has been on the table of debates and creating resistance? We have compiled them for you here:

    1- Draw a medium-term plan to help bring down Lebanon’s public debt to sustainable levels and fill the fiscal deficit. They previously recommended trying to achieve a surplus GDP of 4-5% to decrease the debt-to-GDP ratio.

    2- Increase tax revenues by increasing the value-added tax and removing exceptions on items like foreign-registered yachts, diesel for electrical generators, and road vehicles. Also, increasing fuel excises and taking measures to reduce tax evasion.

    3- Eliminating electricity subsidies and raising tariffs to close the state electrical company’s financial deficit. The IMF says this has the highest potential for expenditure saving.

    4-  Scale-up targeted transfers to the poor and allocate 0.5% more of the GDP on social safety net spending in order to cushion the impact of the austerity measures.

    View this post on Instagram

    A post shared by Marwan G Nassar (@marwan.g.nassar)

    5- Review the budget to identify areas for saving. This includes the public sector wage bill and pensions, which are a disproportionate amount of the budget.

    6- Make structural reforms such as lowering the cost of doing business through legislation that includes areas such as bankruptcy to private business partnerships.

    Also, boosting the competitiveness of Lebanon’s export sector to help maintain the dollar peg and allowing for 24/7 electricity, which is one of the biggest obstacles to businesses.

    7- Strengthening the financial sector by gradually decreasing the support the government receives from the Central Bank and boosting the Central Bank’s balance sheet.

    https://www.instagram.com/p/B7HL_ZBBnPT

    This would require making banks provide their own capital buffers and bolster deposit insurance.

    8- Draft anti-graft laws designed to crack down on financial corruption and illicit enrichment by public officials.

    View this post on Instagram

    A post shared by @lebanon.corruption.facts (@lebanon.corruption.facts)

    Also, requiring officials to declare their assets and set up an independent committee to investigate corruption.

    International Monetary Fund (IMF)
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