The International Monetary Fund (IMF) recently conducted a week of meetings in Beirut and observed that although Lebanon has made strides toward the reforms necessary to revitalise its economy, there are still important steps to take and that it will require concessional external funding.
The country’s ruling elite’s decades-long wasteful spending caused Lebanon’s economy to collapse in late 2019. IMF funding required reforms were repeatedly thwarted by private and political interests.
After Israel’s military campaign in 2024 caused widespread destruction and displacement, Lebanon now faces additional needs. The country’s new prime minister and president, who took office in early 2025, promised to prioritise reforms and secure an IMF financing agreement.
“The authorities have made some progress recently, including the amendment of the Bank Secrecy Law and submission of a new bank resolution law to Parliament,” the IMF’s Lebanon mission chief Ramirez Rigo said in a written statement.
According to Rigo, his mission had “productive discussions” with Lebanese officials about several topics, such as improving anti-money laundering and anti-terrorism financing measures, fiscal and debt sustainability, and reviving the banking industry.
He further stated that the restructuring of Eurobond debts, which Lebanon defaulted on in 2020, should be supported by the country’s medium-term fiscal framework. This would result in a sovereign default on its USD 31 billion in outstanding international bonds.
“Given Lebanon’s substantial reconstruction needs, limited fiscal space and lack of capacity to borrow, the country will require significant support from external partners on highly concessional terms,” the IMF statement said.
The World Bank estimated that USD 11 billion would be needed for Lebanon’s recovery and reconstruction after Israel’s military campaign. However, until Hezbollah, the Iran-backed Lebanese armed group that fought Israel in 2024, is disarmed, the United States has stated that it will not provide any reconstruction funding to Lebanon.
Meanwhile, the IMF report highlights a worsening outlook for development, reevaluates the SDGs’ viability, and suggests ways to quicken progress in the face of growing financial and economic strains.