People walk in the shade of trees along central Beirut's Hamra Street on June 23, 2023. (PHOTO / AFP)
BEIRUT — Lebanon's economic outlook is still "highly uncertain," although it somehow showed economic stability in the post-COVID period, according to an IMF report released on Thursday.
Since the onset of "an unprecedented sovereign-banking-currency crisis" more than three years ago, Lebanon's economy has contracted by about 40 percent, its currency has lost 98 percent of its value, inflation has been at triple-digits, and the central bank has lost two thirds of its foreign exchange reserves, the IMF report said.
It said that "decisive implementation of a comprehensive economic recovery plan could steadily reduce imbalances and provide a policy anchor that will help restore confidence and facilitate return to growth"
The economy showed some signs of stabilization in 2022, mainly supported by the expiration of COVID restriction measures, a rebound in tourism, strong remittances inflows, and a gradual improvement in trade in the second half of the year, according to the IMF report of Article IV Consultation with Lebanon.
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However, the IMF warned that Lebanon's economic outlook is highly uncertain and this, together with banking sector restrictions and power shortage, has hindered economic activity.
"The continuation of the status quo presents the largest risk to the outlook. Further delays of reforms will keep confidence low and cash dollarization of the economy will increase," it noted.
It said that "decisive implementation of a comprehensive economic recovery plan could steadily reduce imbalances and provide a policy anchor that will help restore confidence and facilitate return to growth."
Ernesto Ramirez Rigo, the IMF's representative in Lebanon, said in a statement to reporters that delay in reforms needed to clinch a bailout program with IMF could impose "a tremendous cost" to Lebanon, the Lebanese Broadcasting Corporation International reported on Thursday.
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According to the IMF, the government's plan must include fundamental pillars, such as addressing the debt issue; amending the banking secrecy law; unifying exchange rates and implementing capital controls; enhancing anti-corruption and anti-money laundering frameworks.