---
title: "Between Lebanon and the International Monetary Fund: Postponed Negotiations and Incomplete Reforms | Ghazi Mahmoud"
url: https://ghazimahmoud.com/en/articles/2025-10-22-b7a259/
lang: en
description: "The outcomes of the meetings held by the official Lebanese delegation with the International Monetary Fund as part of its participation in the autumn meetings of the IMF and the World Bank did not differ from previous ones, particularly last spring's meetings."
---

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# Between Lebanon and the International Monetary Fund: Postponed Negotiations and Incomplete Reforms

[Brig. Gen. (Ret.) Dr. Ghazi Mahmoud](https://ghazimahmoud.com/en/about/)

22 Oct 2025 · 5 min read

[Banking and money](https://ghazimahmoud.com/en/articles/money/)[The Lebanese economy](https://ghazimahmoud.com/en/articles/leb/)

The outcomes of the meetings held by the official Lebanese delegation with the International Monetary Fund as part of its participation in the autumn meetings of the IMF and the World Bank did not differ from previous ones, particularly last spring's meetings. Indeed, the gap still appears wide between the reforms Lebanon is undertaking and the IMF's demands. Observers see in this a growing firmness on the part of the Fund that aligns with the international community's hardening stance on its political conditions, chief among them confining weapons to the hands of the Lebanese state, a condition that cannot be ignored or bypassed.

Despite Lebanon's efforts to maintain positive relations with international financial institutions, particularly the IMF, the Fund is becoming increasingly strict in its reform demands, leading to the postponement of a preliminary agreement between the two sides, a postponement that is neither the first nor will it be the last. The Fund considers that further steps are needed before any agreement can mature, even at the staff level, as the IMF mission emphasized during its visit to Lebanon last September.

It is worth noting that until 2019, Lebanon's relationship with the International Monetary Fund went no further than policy recommendations on the state's economic and financial affairs, issued through an annual report by the Fund under Article IV of its Articles of Agreement. Ironically, these recommendations did not prevent the financial and economic collapse that has struck Lebanon since early 2020. Moreover, the Fund linked Lebanon's exit from the crisis to reaching an agreement with it for a loan of between $3 billion and $4 billion to address the worsening liquidity crisis that accompanied this collapse.

In light of the recent discussions in Washington, questions have emerged over the reasons behind the Fund's strict stance toward Lebanese reforms, especially in the banking sector. The Fund considers that the bank restructuring law contains legal loopholes it had warned against prior to its passage, making its implementation nearly impossible, particularly with regard to liquidation and restructuring decisions.

Matters grew even more complicated following the appeals filed before the Constitutional Council and its acceptance of some of them, in addition to the fact that the law itself contains articles suspending its implementation pending the passage of the financial regularity law, or financial gap law. Economist Mohamad Fheili describes this linkage as having "nullified the law, stripped it of its authority, and emptied it of its substance."

Beyond the required amendment to the bank reform law, the Fund objects to the composition of the Higher Banking Commission, both because it is chaired by the governor of Banque du Liban and because it includes members representing entities influenced by the orientations and decisions of the banks and their association. Notably, the provisions of this law will determine the distribution of powers within Banque du Liban regarding the restructuring of the banking sector. This concentrates both decision-making and executive power in the hands of the governor and eliminates any oversight role over its decisions.

The 2026 budget was also the subject of criticism, as IMF mission chief Ernesto Ramirez Rigo had expected the government to adopt a more ambitious approach in a budget for 2026 compared with the draft approved by the Council of Ministers, and to include all estimated expenditure items, including externally financed ones. Tax policy reforms should also be considered, even though the budget includes a vision for broadening the tax base and improving compliance, in order to secure financial resources for spending on reconstruction and social protection.

The financial regularity law is considered one of the most complex files in the negotiations between the Lebanese delegation and the International Monetary Fund, given the disagreement over the state's role in covering the losses resulting from the financial crisis. Banks are pushing for the state to bear a large portion of these losses by converting them into state liabilities and consequently into public debt, which would make recovering deposits nearly impossible and drive public debt to unsustainable levels.

The Fund rejects the loss-allocation plan and the mechanisms for addressing bank deposits, including converting part of the deposits into long-term bonds. Deposits had previously been classified into three categories: illicit deposits, those with high interest rates, or those converted from the pound into the dollar after the October 17, 2019 crisis.

The fundamental divergence between Lebanon and the International Monetary Fund lies in Lebanon's insistence on using conventional mechanisms to address its unprecedented crisis, whereas the Fund believes the current situation requires exceptional standards and unconventional solutions.

Despite widespread criticism of the International Monetary Fund's policies and the experiences of distressed countries with it, objectivity and fairness require acknowledging that the Fund is right to criticize Lebanon's reform performance, which contradicts declared objectives and reflects a clear bias toward the interests of the political and banking class at the expense of the national economy and depositors.

Here, a question must be asked, perhaps the most prominent one: how can the Lebanese state, both government and legislature, reconcentrate banking authority in the hands of the governor of Banque du Liban, ignoring the consequences of the previous experience under Governor Riad Salameh? And why are the Higher Banking Commission and the Banking Control Commission not separated from the authority of the central bank to ensure genuinely independent oversight?

An equally important question remains regarding the lack of transparency in the public budget, which fails to include all expenditure items, including those financed through foreign loans. Can an "incomplete" budget absolve the state of its international obligations? Those questions remain open while awaiting genuine reforms that go beyond form to substance.

Neither the spring nor the autumn meetings will lift Lebanon out of its crisis unless there is a genuine will for reform stemming from within rather than from external conditions. What is needed today is a national reform plan that puts the interests of the Lebanese ahead of those of politicians and bankers, and prevents the International Monetary Fund from imposing its unfair prescriptions on depositors and employees, away from political polarization and foreign pressure. Only responsible and courageous leadership can pull the country out of its spiral of collapse, out of mercy for the Lebanese rather than submission to the dictates of others.

Translated from Arabic with AI. [Read it in Arabic](https://ghazimahmoud.com/articles/2025-10-22-b7a259/)

## Published in

- [Channel 23](https://ch23.com/Article/305848/بين-لبنان-وصندوق-النقد-الدولي-مفاوضات-مؤجَّلة-وإصلاحات-غير-مكتملة)
- [Lebanon Files](https://www.lebanonfiles.com/2025/articles/باقلامهم/بين-لبنان-وصندوق-النقد-الدولي-مفاوضات/)
- [MTV Lebanon](https://www.mtv.com.lb/news/1622919)
- [OZ Arab Media](https://ozarab.media/بين-لبنان-وصندوق-النقد-الدولي-مفاوضات/)

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