Lebanon’s caretaker Prime Minister, Najib Mikati, warned on Thursday that the country’s total economic collapse will be imminent in the event that the Central Bank and its newly appointed governor fail to implement reform policies called for by the International Monetary Fund (IMF).
“Lebanon will not be able to secure medicine or pay salaries in foreign currency, in the event that the monetary and economic plan presented by the Acting Governor of the Banque du Liban, Wassim Mansouri, is not approved,” the caretaker prime minister said.
“Mansouri’s plan is consistent with the government’s plans, and our goal is to approve these plans and not waste time because the goal is to save the country,” he said.
In reference to consultations made recently between Mikati and the interim bank governor, the former said that there is “harmony [in the Central Bank] with the government’s plans.”
However, Lebanese media reported Thursday that the Central Bank is considering completely halting its funding of the state as of Monday, August 7.
Upon taking the reins of the Central Bank following the end of Riad Salameh’s term last month, Mansouri said: “I will not sign on any expenditure for financing the government if it contravenes with my principles or the appropriate legal framework.”
Days later, Lebanon’s parliament failed to pass a law that would allow the state to borrow foreign currency from the Central Bank. Mansouri’s condition for lending funds to the state from the Central Bank was the passing of the law, and the reimbursement of the funds “through a realistic plan,” Naharnet reported.
The reforms that the caretaker prime minister referred to include capital controls, a bank restructuring law, and the 2023 state budget – which are all conditions imposed by the IMF for a bailout package.
Lebanon has been negotiating with the IMF in order to secure a bailout package to alleviate the severe economic crisis created by decades of corruption in the financial sector.
However, Washington, the IMF, and the World Bank have been accused of exploiting the country’s economic crisis to exert political pressure on Lebanon.
As a result of the financial crisis Lebanon faces, the country’s currency has lost 98 percent of its value, and the life savings of a majority of citizens have been wiped out.