The “National Bloc”: Is the preliminary agreement with the International Monetary Fund “another doomed test”?

The recently announced preliminary agreement with the International Monetary Fund has not been reached upon the initiative of the Lebanese government, but rather the IMF’s and under stringent pressure from the international community.  

This global community that has completely lost confidence in the Lebanese authority to carry out the required reforms, expressed its fear that the political parties in power might exploit the Parliamentary elections occasion to evade the pledges made by Najib Mikati's government.

The agreement comprises key conditions, the National Bloc vigorously demanded 3 years ago:

o   Implementing a restructuring strategy to public debt and banks that recognizes and addresses upfront the large losses in the sector, after auditing main banks’ accounts.

o   Completing the forensic audit of the Lebanese Central Bank.

o   Amending banking secrecy law.

o   Unifying the multiple foreign exchange rate and regulating capital’s flows through a transparent mechanism of the Capital Control measures.

o   Approving the budget for 2022 in light of the government and Parliament’s continuous procrastination to evade responsibilities of tackling the crisis.

The preliminary agreement places the Lebanese government squarely face-to-face with its responsibility in passing the required bills to the parliament. Today, there are two logical pathways, either reform or a rapid collapse, leading to a large unprecedented rise in the dollar exchange rate in the post-election phase, while today the LBP/USD crossed the 25000 LBP on the black market, without any news of optimism on the monetary front.

The preliminary agreement with its clear conditions, also places the Lebanese people squarely face-to-face with their responsibility in determining the compass of the upcoming parliament elections on May 15, as the newly elected parliament will have the absolute power to vote on the required bills.

The conditions set by the IMF, despite the “play of cheers and tears” by some members of the authority, are today rejected by its pro-economic influence hubs, under the pretext of targeting the banking sector, whereas one of its leading figures is running on the duo's list in the South III electoral district.

The agreement was imposed on an authority that rejected reforms for more than two years, and does not have a clear plan for rescue and revival. But yes, Lebanon stands a chance of receiving $3 billion to help it overcome its financial crisis, if the new parliament commits to implementing the required reforms. There will be no unconditional aid pledges, as was the case in the international donor conferences for Lebanon (Paris 1,2 and 3).

However, approval is contingent on timely implementation of all prior actions and confirmation of international partners' financial support. This includes a fully-fledged reform strategy, a new parliament, a political will that adheres to the interest of the Lebanese people first - free from mafia networks and obligations towards domestic and foreign actors - so that the preliminary agreement will not be a missed opportunity like the CEDRE reform program ahead of 2018 elections, and yet another test destined to fail.

This dysfunctional authority has been squandering opportunities for 40 years, and on May 15 the ball is in the Lebanese people’s court to achieve the desired change.