Publication: Lebanon Economic Monitor, Fall 2022: Time for an Equitable Banking Resolution
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Date
2022-11
ISSN
Published
2022-11
Author(s)
World Bank
Abstract
The economy continues to contract,
albeit at a somewhat slower pace. Public finances improved
in 2021, but only because spending collapsed faster than
revenue generation. Testament to the continued atrophy of
Lebanon’s economy, the Lebanese Pound continues to
depreciate sharply. The sharp deterioration in the currency
continues to drive surging inflation, in triple digits since
July 2020, impacting the poor and vulnerable the most. An
unprecedented institutional vacuum will likely further delay
any agreement on crisis resolution and much needed reforms;
this includes prior actions as part of the April 2022
International Monetary Fund (IMF) staff-level agreement
(SLA). Divergent views among key stakeholders on how to
distribute the financial losses remains the main bottleneck
for reaching an agreement on a comprehensive reform agenda.
Lebanon needs to urgently adopt a domestic, equitable, and
comprehensive solution that is predicated on: (i) addressing
upfront the balance sheet impairments, (ii) restoring
liquidity, and (iii) adhering to sound global practices of
bail-in solutions based on a hierarchy of creditors
(starting with banks’ shareholders) that protects small depositors.
Citation
“World Bank. 2022. Lebanon Economic Monitor, Fall 2022: Time for an Equitable Banking Resolution. © Washington, DC. http://hdl.handle.net/10986/38339 License: CC BY 3.0 IGO.”