IMF warns Lebanon crisis will intensify as corruption, paralysis continue

Adam Lucente

Jun 29, 2023

Lebanese protesters clash with bank guards in Beirut during a demonstration called for by the banks depositors committee against monetary policies, on May 9, 2023. Lebanon's economic meltdown, described by the World Bank as one of the worst in recent global history, has plunged most of the population into poverty according to the United Nations. (Photo by ANWAR AMRO / AFP) (Photo by ANWAR AMRO/AFP via Getty Images) — Lebanese protesters clash with bank guards in Beirut during a demonstration called for by the banks depositors committee against monetary policies, on May 9, 2023. Lebanon's economic meltdown, described by the World Bank as one of the worst in recent global history, has plunged most of the population into poverty according to the United Nations. — ANWAR AMRO/AFP via Getty Images)

The International Monetary Fund (IMF) released a damning assessment of Lebanon’s economy on Thursday as the country slides further into economic and political crisis.

The Washington-based financial institution said the “continuation of the status quo” in crisis-stricken Lebanon will have significant consequences. The IMF specifically mentioned dollarization, whereby business demand to be paid in dollars instead of the local currency, as well as inflation and decreased government revenue.

“Further delays of reforms will keep confidence low and cash dollarization of the economy will increase. The exchange rate will continue to depreciate, keeping inflation high,” said the IMF in a press release. “Economic activity will move into informal sectors, further complicating the collection of fiscal revenues.”

The IMF added that without reform, Banque du Liban, Lebanon’s central bank, “saddled with unaddressed losses and a lack of credibility, will continue to lose international reserves.”