Economy in Lebanon remains severely depressed, IMF says

• IMF team meets government
• Says poverty ‘exceptionally high’
• Highlights banking collapse

The Lebanese economy remains severely depressed, its condition exacerbated by a two-month war last year between the Iranian-backed Lebanese Hezbollah group and Israel, in which infrastructure and homes were destroyed, the International Monetary Fund has said.

An IMF team visited the country last week and met the new government led by President Joseph Aoun and prime minister Nawaf Salam. 

In a report after the visit, the IMF said: “Lebanon’s economy remains severely depressed, and poverty and unemployment are exceptionally high since the 2019 crisis. 

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“The banking sector collapse continues to hamper economic activity and provision of credit, with depositors unable to access their funds.” 

Recent policy actions have helped maintain some degree of economic stability, the IMF said. Inflation has fallen and the exchange rate has stabilised after the elimination of a fiscal deficit since mid-2023.

“However, these steps are insufficient to address the ongoing economic, financial and social challenges,” the IMF added.

A comprehensive strategy for economic rehabilitation is critical to restore growth, reduce unemployment and improve social conditions, it said.

“The IMF stands ready, together with the international community, to support the authorities’ efforts in addressing these challenges.”

Israel and Hezbollah fought their latest war from September until a ceasefire was agreed in November.

Last year, the World Bank said Lebanon was suffering the worst financial crisis in its modern history, with debt rocketing to nearly 150 percent of gross domestic product, poverty widening and inflation soaring to more than 300 percent.