Lebanon is undoubtedly going through one of the worse economic crises it has in decades. According to Reuters’ interview with former Minister of Economy and Industry Dr. Nasser Saidi, Lebanon needs a bailout of $20 billion-$25 billion, including International Monetary Fund support to emerge from this financial crisis.
Lebanon’s crisis has most recently completely destroyed confidence in its banking system. It has raised investors’ concerns that a default could loom for one of the world’s most indebted countries, with a $1.2 billion.
As Reuters reports: “Depositors and investors say they have been kept in the dark about the country’s dire financial situation for months prior to the information being made so public.”
President Michel Aoun stated on January 3, 2019, that he hoped a new government would be formed “next week.”
But analysts say the cabinet to be led by Hassan Diab may struggle to win international support because he was nominated by the Iranian-backed Hezbollah group and its allies (and we all know where Iran is politically at the moment).
It is no longer a secret, and mostly because it has happened to someone we know, that Lebanese companies have laid-off workers, and business has witnessed a major decline in general.
As banks continue to restrict access to American dollars and the Lebanese pound trades weaker and weaker each week on the black market, the formation of a new Lebanese Government is more pressing than ever.
Dr. Saidi told Reuters that a $20-$25 billion package “could guarantee payment on some of the country’s public debt, enabling it to restructure in a way that would extend maturities and reduce interest rates.”
This would indeed, in theory, need support from the IMF, World Bank, and Western and Gulf states.
Hariri did touch upon the possibility of “technical assistance” from the IMF and World Bank in late 2019, yet there has been no public mention of any assistance in any formal capacity.