By Tom Perry
BEIRUT (Reuters) – The impact of the coronavirus and falling oil prices may have damaged Lebanon’s chances of securing aid from foreign states, the economy minister said on Tuesday, adding that IMF aid should be considered as an option alongside others.
Lebanon is suffering its worst financial crisis since independence in 1943.
It has been unable to pay foreign currency sovereign debt for the first time and its currency has lost some 40% of its value, while dollar reserves are critically low.
Raoul Nehme told Reuters work to draw up economic rescue plans continued despite a shutdown to curb the spread of the new virus. Major aspects of the plan, including how the state will cut the deficit and boost revenues, will probably be ready in two to three weeks’ time, he said by phone.
The full plan requires another two months or so, he added.
Lebanon has requested technical assistance from the IMF but not financial aid that would typically come with conditions.
Some politicians have voiced concern the IMF would impose conditions Lebanon could not meet, but many analysts believe the IMF is Lebanon’s only solution.
States that have helped Beirut in the past have said they will not help this time unless long-delayed reforms take place.
Nehme said it was still too early to gauge the impact of the coronavirus.
But he said aid from states to which Lebanon has been looking for support “can be less significant” if they suffer their own financial problems.
“We will certainly seek the support of our friends in the Arab world but their revenues are going down drastically with the price of oil going down under $30 practically so that puts limitations on their capacity to assist us,” he added.
Asked if the crisis would affect access to potential IMF financial aid, he said: “No that would not be affected.”
“In my opinion depending on discussions with the IMF and so on, yes why not … We cannot say we don’t have this option, and we cannot say this is the only option. But it is certainly an option, it is a good one,” he said.
The powerful Hezbollah, which has previously said it was against allowing the IMF to manage the crisis in Lebanon, softened its position on Friday.
Its leader, Sayyed Hassan Nasrallah, said the group was not against foreign aid even it came from the IMF as long as the terms did not harm the national interest.
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