The Lebanese Government is Formed—Nine Urgent Priorities for Economic Recovery
Lebanon’s economic trajectory remains precarious following the devastating war with Israel (October 2023–November 2024), which compounded an already severe financial crisis. With the IMF expected to reengage in negotiations for a stabilization program, it is imperative that it prioritizes policies that promote equitable recovery while avoiding regressive fiscal measures. Given that the new government has approximately 450 days until the next parliamentary elections, urgent actions are required to ensure tangible progress that does not further entrench structural inequalities.
- Commit to Institutionalized Fiscal and Monetary Accountability
The government and IMF must institutionalize accountability mechanisms to prevent opaque financial governance. Parliamentary oversight of IMF agreements must be enshrined into law, with independent audits of public debt transactions mandated by a national fiscal council. The Central Bank of Lebanon’s (BdL) monetary policy should be subjected to independent review panels, ensuring that interest rate and reserve management decisions are aligned with sustainable economic goals rather than elite-driven rent-seeking practices. - Enforce Debt Restructuring, Away from Financialization of Recovery
Debt restructuring must rectify the inequities that characterized past financial collapses. The IMF should require that loss distribution follows a progressive framework: large-scale financial stakeholders and politically exposed persons (PEPs) must absorb the majority of the losses rather than ordinary depositors. Legal instruments should be enacted to prevent capital flight, and illicitly transferred funds should be systematically traced and repatriated. Austerity measures cannot be the price of debt relief; instead, structural realignment must focus on broad-based economic stabilization. - Unify Exchange Rate With Demand-Sensitive Inflation Control
Exchange rate unification is necessary but must be pursued in tandem with inflation mitigation measures that prevent excessive depreciation from eroding real wages. The IMF must ensure that any unification plan includes wage-indexation policies, targeted interventions to stabilize essential imports, and foreign currency market oversight to prevent speculative manipulation that favors entrenched financial actors. - Implement Taxation Reforms That Dismantle Structural Rent Extraction
Lebanon’s fiscal framework must be reconstructed to tax wealth and capital more effectively. Progressive tax policies should include: financial transaction taxes on large speculative trades, a property/vacancy tax overhaul that eliminates exemptions for politically connected landholders, and enforcement of tax collection from offshore holdings. The IMF should condition financial assistance on these tax justice reforms, rather than merely demanding increases in VAT or indirect taxation that further impoverish the middle and lower classes. - Restore Public Services as a Core Economic Pillar
Public sector investment must be restored to reverse decades of privatization that has allowed monopolistic entities to capture essential services. IMF-backed fiscal frameworks must include dedicated budget lines for universal healthcare, education, and public transport. Public salary structures should be adjusted through transparent benchmarking, ensuring that real wages reflect cost-of-living increases. Privatization must not be a precondition for fiscal consolidation; instead, the focus should be on ensuring efficiency and accountability in public service delivery. - Institutionalize Anti-Corruption Reforms
Economic stabilization is impossible without structural anti-corruption frameworks. The IMF must insist on the creation of a truly independent anti-corruption agency with prosecutorial powers, financial disclosure mandates for public officials, and executable whistleblower protection laws. Additionally, economic recovery must be linked to judicial independence—ensuring that cases related to financial mismanagement, including the Beirut port explosion and banking sector collapse, are adjudicated without political interference. - Rebuild the Economy Through Industrial and Agricultural Expansion
Lebanon must shift from rentier economics to a productive economy by reinvesting in industry and agriculture. The IMF should center infrastructure projects that enable local manufacturing and agricultural self-sufficiency, reducing Lebanon’s over-reliance on imports. Interest-free credit lines should be extended to cooperative agricultural projects, while high import tariffs should be levied against sectors where local production can feasibly replace foreign goods. - Ensure Reconstruction Funds Are Sovereign and Equitably Distributed
Post-war reconstruction must not become another avenue for elite enrichment. The IMF and Lebanese government should establish an independent national reconstruction agency, free of political influence, with a strict, transparent funding allocation mechanism that prioritizes social infrastructure over elite-led real estate speculation. Additionally, all aid disbursements should be subject to real-time public reporting to prevent misallocation. - Implement a Banking Sector Overhaul That Restores Depositor Rights
The IMF’s engagement with Lebanon’s financial sector must ensure an equitable resolution to the ongoing banking crisis. Capital control laws should be enacted to prevent ongoing depositor losses, while forensic audits of commercial banks must be conducted to establish responsibility for financial mismanagement. A tiered depositor recovery scheme must prioritize small and middle-tier depositors over politically connected creditors.