Lebanon’s advisers to work on compromise on financial plan, sources say

A closed shop for rent in the upmarket area of Kaslik, north of Lebanon's capital Beirut, is pictured on July 16, 2020. (AFP)

• The plan has been undermined by objections from Lebanon’s ruling elite, obstructing IMF talks aimed at rescuing the country from a financial meltdown
• The IMF warned Lebanon on Monday that attempts to lower losses from the financial crisis could only delay recovery

BEIRUT: Lebanon’s financial adviser Lazard will see if a government financial rescue plan can be adjusted to reach a compromise workable for the International Monetary Fund, two sources said on Friday, after the plan hit resistance from politicians, banks and the central bank.
The plan, which anticipates vast losses in the financial system, has been undermined by objections from Lebanon’s ruling elite, obstructing IMF talks aimed at rescuing the country from a financial meltdown.
Prime Minister Hassan Diab’s government had approved the plan, which would lead to losses of 241 trillion Lebanese pounds in the financial system, or $68.9 billion at the exchange rate applied by the plan, as the basis for talks with the IMF.
The IMF said the losses appeared to be about the right order of magnitude.
But a parliamentary fact-finding committee, backed by all Lebanon’s main parties, objected to the approach taken in the plan. Applying different assumptions, it came up with losses between a quarter and half that amount.
“Lazard will come possibly next week to see if they can adjust the government plan and work on a compromise acceptable to the IMF. They will do any adjustment based on the government plan,” one of the sources said.
The second source said the aim of the Lazard visit is “how we can try to adjust the government plan to see if we can come up with something workable for the IMF and for the Lebanese counterparts.”
Lebanon’s legal adviser, Cleary Gottlieb Steen & Hamilton LLP, is also visiting the country, the sources said.
Lazard and Cleary Gottlieb declined to comment.
The IMF warned Lebanon on Monday that attempts to lower losses from the financial crisis could only delay recovery.
Alain Bifani, a senior member of Lebanon’s negotiating team with the IMF, resigned as finance ministry director general last month, saying vested interests were undermining the government plan.