The International Monetary Fund said talks with Lebanon on a potential financial program are progressing, as the country grapples with the impact of Israel’s war against Hezbollah.
The negotiations come as Lebanon tries to extend a ceasefire with Israel that ends on Sunday, with direct talks between the two set to take place in Washington.
A longer truce will “be an opportunity to accelerate the discussions” between the IMF and Lebanon, Jihad Azour, the Washington-based lender’s Middle East and Central Asia director, said in an interview with Bloomberg TV.
In March 2020, Lebanon defaulted on around $30bn of international bonds — part of a series of financial and political crises to hit the country. Its gross domestic product has shrunk by about one-third to $35bn since 2018, according to IMF figures.
Now, it’s deeply embroiled in the regional conflict that began when the US and Israel attacked Iran in late February. Hezbollah attacked Israel with rockets days later, prompting an Israeli air campaign and ground offensive into the south of the country.
The Lebanese government says more than 2,000 people have been killed and 1mn displaced by the conflict. Israeli strikes have battered parts of Beirut, the capital, and southern Lebanon.
Lebanon is discussing with the IMF options for fast-track assistance that would give the country access to between $800mn and $1bn, Bloomberg has reported, citing people familiar with the matter. The money would be earmarked for budget support and its humanitarian response.
According to Azour, talks between Lebanon and the IMF during the lender’s spring meetings in Washington recently focused on how to address the immediate impact of the war.
“Lebanon needs to get more support internationally in forms of grants in order to alleviate the humanitarian pressure and to accelerate the reconstruction,” he said.
