IMF Delegation Wraps Up Lebanon’s Visit
Throughout September 15-18, 2026, International Monetary Fund (IMF) staff visited Lebanon to assess macroeconomic conditions and economic and financial reform progress. Key findings included:
- Economic impact: The Hezbollah–Israel war and regional instability have severely affected Lebanon’s economy. The economy is set to contract in 2026, inflation is still in double digits, and the current account deficit has widened due to higher energy costs. Infrastructure damage, housing losses, and large scale internal displacement have worsened living conditions. Amid these challenges, the mission recognized efforts to safeguard stability via prudent policies.
- Reform progress: The mission welcomed improvements in budget management and amendments to the Bank Resolution Law, aligning Lebanon’s framework with international standards for resolving the banking crisis.
- Banking sector: Discussions focused on amending the Financial Stabilization and Deposits Recovery Law (known as the financial gap law) to ensure depositor protection, respect the hierarchy of claims, and make sure that a viable banking sector comes out of this process. The proposal should also align with international standards and public debt sustainability.
- Fiscal framework: The draft 2027 budget aims for balance and stronger tax compliance, but expenditure pressures remain due to unimplemented VAT increases that targeted financing wage/pension costs increase. Staff urged authorities to implement the VAT increase, ensure comprehensive recording of foreign‑financed spending, prioritize support for displaced persons, allocate space for capital spending, and exercise restraint on ad‑hoc salary adjustments unless matched by new revenue.
- MTFF Progress: Progress was noted on developing a medium term fiscal framework (MTFF) to anchor budgets, restore fiscal sustainability, and create space for reconstruction and social protection. Further effort is needed to prioritize and sequence fiscal measures and to integrate capital and social spending effectively.
- IMF commitment: The Fund reaffirmed its support for Lebanon’s reform agenda and pledged continued engagement toward a potential IMF arrangement.
