Compromise rescue plan to be adjusted as Lebanon faces the abyss

BEIRUT: Lebanon’s financial adviser Lazard, the US investment bank, will see if a financial rescue plan can be adjusted to reach a compromise workable for the International Monetary Fund, two sources said on Friday. 

The move comes as the proposed rescue plan meets growing resistance from politicians, banks and Lebanon’s 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.”

Lazard declined to comment.

Lebanon’s legal adviser, Cleary Gottlieb Steen & Hamilton, is also visiting the country, the sources said.

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.