IMF and World Bank Condition Reconstruction Aid for Lebanon on Political Reforms
The IMF and World Bank are tying reconstruction funds for Lebanon to conditions of normalization with Israel and Hezbollah’s disarmament. Recent dialogues emphasize the urgency of reforms needed for access to financial support, amidst ongoing negotiations for a substantial $1 billion reconstruction project following the Israeli war, which may be hindered by U.S. pressure and political dynamics.
The International Monetary Fund (IMF) and World Bank plan to condition reconstruction funds for Lebanon on specific reforms, including ties to Israel and the disarmament of Hezbollah. According to Al-Akhbar, in a recent meeting, IMF chief Kristalina Georgieva indicated that Lebanon’s access to funding will depend on completing specific actions within a designated timeframe.
Sources note that these conditions align with anticipated political pressures around normalization with Israel and disarmament dialogues regarding Hezbollah. The U.S. special envoy to West Asia, Steve Witkoff, has also suggested potential normalization deals involving Lebanon and Syria with Israel.
Previously, Lebanon and the IMF reached a staff-level agreement for a four-year Extended Fund Facility valued at approximately $3 billion, which remains unratified due to Lebanon’s continuing crises and entrenched corruption. Recently, Lebanese Finance Minister Yassin Jaber informed that the World Bank is preparing a preliminary $1 billion reconstruction plan to address war damages in Lebanon, with initial commitments of $250 million earmarked for Beirut’s recovery.
World Bank representatives have requested expedited approval procedures for this funding ahead of the Executive Board meeting scheduled for 25 March. The European Union has similarly conditioned its financial support for Lebanon on substantial reforms to the banking system, impacting the disbursement of €500 million allocated under a 2024 agreement with Beirut.
Following the recent war, Lebanon requires approximately $6-7 billion for comprehensive reconstruction. Hezbollah has been a key contributor to the early stages of rebuilding southern Beirut, allocating roughly $650 million for housing. However, U.S. pressures have continually hindered the flow of funds necessary for further efforts.
The IMF and World Bank have set specific conditions for the disbursement of reconstruction funds to Lebanon, demanding political reforms that include normalization with Israel and the disarmament of Hezbollah. Without these reforms, Lebanon’s access to crucial financial support is likely to be further delayed. The necessity for reconstruction funds underscores the urgency of addressing Lebanon’s economic crisis and infrastructure needs while navigating complex international relationships.
Original Source: thecradle.co
