The IMF and World Bank are conditionally offering reconstruction funds to Lebanon based on its normalization with Israel and disarmament of Hezbollah. Efforts are underway for a $1 billion reconstruction initiative, with the EU and IMF linking further funding to vital reforms in Lebanon’s financial system.
The International Monetary Fund (IMF) and World Bank are reportedly conditioning reconstruction funds for Lebanon on the country’s normalization with Israel and disarmament of Hezbollah. In a meeting between Banque du Liban Governor Wassim Mansouri and IMF chief Kristalina Georgieva, it was indicated that Lebanon’s access to these funds will be contingent upon specific political steps and reforms, which are expected to unfold within a defined timeframe,
Sources close to the matter revealed that these requirements align with emerging political pressure to pursue normalization and disarmament. On a related note, U.S. special envoy Steve Witkoff mentioned that Lebanon and Syria have potential to enter into normalization agreements with Israel. Witkoff stated, “Lebanon, by the way, could actually mobilize and come into the Abraham Peace Accords, as could potentially Syria. So, so many profound changes are happening.”
In 2022, Lebanon and the IMF reached a preliminary agreement for a four-year Extended Fund Facility valued at approximately $3 billion. This agreement remains stalled due to Lebanon’s persistent financial crises and corruption issues. Furthermore, Lebanese Finance Minister Yassin Jaber announced a $1 billion reconstruction plan, with an initial $250 million earmarked for Beirut to recover from previous conflicts.
The World Bank has requested that necessary procedures be expedited for the approval of this funding by its Executive Board, putting a focus on western demands for political and financial reforms. Additionally, the European Union has linked funding for Lebanon to the restructuring of its banking sector, hindering the release of 500 million euros in pledged aid designed to mitigate refugee flows into Europe.
Following recent hostilities, Lebanon’s estimated reconstruction needs are between $6 to $7 billion. The Lebanese resistance has contributed significantly to rebuilding efforts with an estimated $650 million allocated for housing and restoration, although funding has faced significant obstacles due to U.S. pressures on finances flowing towards the resistance.
In summary, the IMF and World Bank’s reconstruction funds for Lebanon are contingent upon both normalization with Israel and Hezbollah’s disarmament. While some reconstruction plans are in place, the broader financial aid and necessary reforms remain entangled in geopolitical dynamics and internal corruption in Lebanon. The international community is urging structural changes to Lebanon’s banking sector as prerequisites for continuing assistance and support.
Original Source: thecradle.co
