IMF Reports Lebanon’s Economy in Depression Amidst Banking Collapse

The IMF reports that Lebanon’s economy is severely depressed, worsened by a previous conflict with Israel. Poverty and unemployment remain exceptionally high, exacerbated by a banking sector collapse that limits economic activity. The IMF emphasizes the need for a comprehensive strategy for economic rehabilitation and has pledged support to the Lebanese authorities.

The International Monetary Fund (IMF) has reported that the Lebanese economy is in a severe state of depression, worsened by last year’s two-month conflict between Hezbollah and Israel, which resulted in significant destruction of infrastructure. An IMF team recently met with the newly established government, led by President Joseph Aoun and Prime Minister Nawaf Salam, to discuss the country’s dire economic conditions.

The IMF indicated that both poverty and unemployment levels remain exceptionally high since the economic crisis in 2019. The report noted that the ongoing collapse of the banking sector is severely restricting economic activity and credit availability, leaving depositors unable to withdraw their funds. Despite some policy measures leading to a temporary stabilization of inflation and the exchange rate, the IMF stated that these efforts are inadequate in resolving the persistent economic, financial, and social issues.

To address these challenges, the IMF emphasized the necessity of a comprehensive strategy for economic rehabilitation to stimulate growth and alleviate social hardships. The organization affirmed its commitment to assist both the Lebanese authorities and the broader international community in tackling these pressing problems. Following the conflict last year, Lebanon has faced its most severe financial crisis in modern history, with debt reaching approximately 150 percent of gross domestic product and inflation soaring.

In summary, the IMF’s report underscores the urgent need for a strategic approach to rehabilitate Lebanon’s economy, particularly in light of extreme poverty and unemployment rates. The ongoing banking sector collapse represents a critical barrier to economic recovery. While recent policy actions have provided some stability, comprehensive measures are required for sustainable growth and improvement in social conditions. The IMF remains poised to support Lebanon in overcoming these challenges.

Original Source: www.agbi.com