Lebanon has made progress on reforms needed to revive its economy but still has key steps to take and will need external funding on concessional terms, the International Monetary Fund said on Thursday after a week of meetings in Beirut.
Lebanon’s economy went into a tailspin in late 2019, prompted by decades of profligate spending by the country’s ruling elite. Reforms required to access IMF funding were repeatedly derailed by political and private interests.
Lebanon’s new president and prime minister, both of whom took office in early 2025, pledged to prioritise reforms and secure an IMF financing agreement - but the country now faces additional needs with the widespread destruction and displacement caused by Israel’s military campaign last year.
An IMF mission led by Ernesto Ramirez Rigo visited Lebanon from May 28 to June 5, 2025, to initiate discussions on policies and a reform program that could be supported by an IMF arrangement.
“The authorities have made some progress recently, including the amendment of the Bank Secrecy Law and submission of a new bank resolution law to Parliament. The next step is for Parliament to approve this legislation, which will establish powers to underpin the recovery of orderly banking intermediation, while safeguarding the public interest,” the IMF’s Lebanon mission chief Ramirez Rigo said in a written statement.
“The mission also engaged with the authorities on their emerging bank restructuring and deposit recovery strategy. More work in close cooperation with the authorities will be needed to ensure this strategy is aligned with international standards and debt sustainability requirements,” he added
"The mission also discussed the 2026 Budget and the development of a medium-term fiscal framework. For the 2026 Budget, given the limited fiscal space and available financing, it is critical that any additional expenditures be fully offset by corresponding revenue efforts, including by strengthening enforcement and compliance in tax and customs administration. An ambitious medium-term revenue mobilization and expenditure rationalization strategy along with improved fiscal transparency and public financial management is needed to strengthen public finances and create space for increased social protection and capital expenditures,” Rigo observed.
He said Lebanon’s medium-term fiscal framework should support the restructuring of Eurobond debts, which Lebanon defaulted on in 2020, leading to a sovereign default on its $31 billion of outstanding international bonds.
“Given Lebanon’s substantial reconstruction needs, limited fiscal space and lack of capacity to borrow, the country will require significant support from external partners on highly concessional terms,” the IMF statement said.
The World Bank estimated Lebanon’s recovery and reconstruction needs following Israel’s military campaign at $11 billion, according to a Reuters report. But the U.S. has said it opposes any reconstruction funds to Lebanon until Hezbollah -- the Iran-backed Lebanese armed group that fought Israel last year -- is disarmed.
