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

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. 


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.

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.

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.

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During the 2015 garbage crisis, while Lebanese citizens were drowning in uncollected trash, the country’s political elite quarreled over lucrative waste-management contracts. The “solution” was to build two new landfills and award the multi-million dollar deals ($288 million and $142 million) to two companies owned by figures who are close to those in power (for more info on ownership and crimes see article below).⠀ ⠀ The waste management sector in Lebanon is a major source of corruption, as the lack of tender process for awarded contracts means that they are often handed to the companies closest to politicians —who in turn benefit from these deals. Many suspect that a sizeable chunk of these revenues were channeled through kickbacks to political leaders to ensure ‘smooth operations’.⠀ ⠀ This is why there has never been a rush to solve the rampant waste crisis in Lebanon from which our political elites have been benefiting. Three years after they opened, the landfills have merely relocated the garbage crisis to the coast, and are now threatening to reach full capacity. We are nowhere near resolving Lebanon’s ongoing environmental crisis and will be contributing to it if we continue to allow the current political class to stay in power.⠀ ⠀ ARABIC CAPTION IN THE COMMENT SECTION⠀ ⠀ SOURCES: As reported by The New York Times, To Make Sense of Lebanon’s Protests – Follow the Garbage, Vivian Yee and Hwaida Saad, 3 December 2019 & One Year On, Lebanon’s Waste Management Policies Still Stink, Economistes Arabes, 15 September 2016⠀ ⠀ ‎#لبنان_ينتفض #LebanonRevolution⠀

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

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