Speech

Managing Director Kristalina Georgieva's Remarks at the International Conference in Support of the Population of Lebanon

August 4, 2021

I would like to thank President Macron and the UN Secretary General for bringing us together for this conference.   

Since we met after the devastating explosion in Beirut last August, parts of the city have been rebuilt and there was hope back then that such a tragedy would galvanize broader political, social, and economic reform. Regrettably, this has not happened. On the contrary, what we are seeing is a dramatic deterioration in the living conditions for the people of Lebanon.

Many speakers highlighted the humanitarian crisis in Lebanon. Let me just add a point on the economy. It has already shrunk by nearly one-third since 2017—and it is expected to contract further in 2021–22; unemployment is through the roof. And on top of it, the pandemic continues to take its heavy toll. 

It is in this context that you have brought us together, President Macron, to talk about people who have endured far too much neglect of their pressing humanitarian needs, and far too long a delay in reforming a badly weakened economy.

So for us, for the IMF, there is the urgency to act today, and the importance of a longer-term transformation of the Lebanese economy. 

On the urgency to act, as you mentioned – and I want to thank you personally for your leadership on the SDR allocation – we do now have the August 2 vote of our Board of Governors for the $650 billion new SDR allocation, to be distributed in a couple of weeks according to quota shares. For Lebanon, this is not trivial. Lebanon would receive about $860 million of SDRs at this critical moment to strengthen the country’s depleted reserves and also to help with the many urgent needs of the Lebanese people.

It is imperative that SDRs are used responsibly and wisely. It is important everywhere, but so critical for Lebanon, a country in such dire straits. This is a precious resource. It must be deployed for the maximum benefit of the country and its people. How to use SDRs, of course, is a sovereign decision—but it must be a good decision. The Lebanese people have the right to know what are these SDRs going to do for them – and I call upon our international and domestic partners: work with us to help ensure transparency and accountability of the deployment of Lebanon’s new SDRs allocation.

But the SDRs are not going to fix Lebanon’s longer-term structural, systemic problems. What do we need for that? We need a government that is empowered to reform and revitalize Lebanon’s crippled economy.

We know the areas of action. We know what needs to be done:

• First, tackle head-on the fundamental problem of weak governance: strengthen  anti-corruption; improve the performance of state functions, in particular management of state-owned enterprises, and I would zero in on the energy sector as the most critical area for action; complete an audit of the central bank and the electricity provider.   

• Second, implement a fiscal strategy, combining deep debt restructuring and reforms to restore credibility of the country. Pay attention to social spending as part of this strategy.     

• Third, pursue a comprehensive restructuring of the financial sector, recognize upfront the losses at private banks and the central bank, but do so in a manner that protects smaller depositors.   

• Last but not least, we need a credible monetary and exchange rate system, supported by unification of exchange rates.

Over the past year, we have been available for the Lebanese authorities, but let me be very honest: engagement is severely constrained by the absence of an effective government. So, let me again urge Lebanon’s political leaders to coalesce around a new government that has the will and the mandate to implement reforms. 

My closing message is to the wonderful people of Lebanon: we stand by you and we very much look forward to a government stepping forward so we can join forces to pull Lebanon out of the tragedy of these last years, together.