Lebanon and the IMF: A Crisis of Will

Writer: Khalil Gebara

Since October 2019, Lebanon has been engulfed in one of the most severe and protracted economic and financial crises documented globally since the mid-nineteenth century. Triggered in 2019 by the reversal of capital inflows that had long sustained an unsustainable economic model, the crisis has manifested as a devastating combination of sovereign debt default, a banking sector collapse rendering deposits inaccessible, a currency that has lost over 98 percent of its value, persistent inflation decimating incomes, and a catastrophic surge in poverty and unemployment. State institutions crumbled in the initial years of the crisis, becoming unable to provide essential services.

Throughout Lebanon’s recent history, the International Monetary Fund (IMF) has maintained a consistent presence, initially offering technical assistance and conducting regular economic assessments through Article IV consultations. However, the IMF’s role has shifted dramatically since the 2019 meltdown and Lebanon’s first-ever sovereign default in March 2020. It is now viewed as the indispensable anchor for any potential financial rescue package, holding the key to its own resources and to unlocking billions in aid pledged by other international donors. This evolution from diagnostician to gatekeeper has significantly raised the stakes of Lebanon’s engagement with the IMF.

This article reflects on the contentious relationship between the IMF and Lebanon from the post-civil war reconstruction era to the present. It argues that while the IMF consistently diagnosed Lebanon’s core structural economic weaknesses and prescribed necessary reforms, the powerful vested political and financial interests have prevented meaningful economic and financial change. The cumulative failure to address fundamental imbalances over decades ultimately precipitated the current catastrophic crisis, leaving Lebanon trapped between the imperative of IMF intervention and a domestic political structure incapable of fulfilling the required conditions.

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