Our so-called "modern" societies are experiencing an unprecedented spread of the procrastination "pandemic," a chronic illness of delaying essential tasks. This ailment has now infiltrated decision-making circles, where leaders deliberately evade their responsibilities to maintain the status quo and avoid accountability. The clearest example of this is how Lebanese authorities have intentionally dodged implementing the terms of their agreement with the International Monetary Fund (IMF) for the past three years.

Today, a pressing question arises: what is the fate of the "Staff-Level Agreement on Economic Policies with Lebanon", signed in April 2022, to benefit from the "Four-Year Extended Fund Facility"? Will this agreement—of which Lebanon has implemented almost nothing—be revisited, or has it been shelved for good? At the same time, can Lebanon break free from its economic isolation without the IMF's "seal of approval"? More importantly, will policymakers swallow the bitter pill of reforms unless forced to do so?

Gone and Not Coming Back

The IMF left Lebanon after its last assessment mission to Beirut in the spring of 2023 and has not returned since. This was followed by Lebanese officials' failed attempts to court IMF Managing Director Kristalina Georgieva on the sidelines of the IMF and World Bank Spring and Fall Meetings in Washington that same year. The Fund deemed Lebanon’s amendments to its banking secrecy law and the unification of its exchange rate insufficient. Moreover, its reluctance to restructure the banking sector and fairly distribute losses based on a hierarchy of responsibilities only exacerbated the situation.

From a broader perspective, "it is no longer easy for any future Lebanese government to secure an agreement with the IMF, even if it remains theoretically possible," according to Dr. Mounir Rachid, President of the Lebanese Economic Forum and former IMF official. The reason? The IMF imposes strict preconditions and criteria that are difficult to meet in Lebanon's current state. The most critical among them include:

Reducing the debt-to-GDP ratio, which would require wiping out a significant portion of bank deposits at the Central Bank—equivalent to nearly 90% of total deposits. This measure faces fierce resistance as it is seen as unconstitutional and would likely be blocked by the State Council and key parliamentary blocs.

Floating the national currency, a decision that raises fears of a freefall in the Lebanese lira’s value, further eroding purchasing power, especially for public sector employees, and increasing the strain on the state budget.

Passing a banking liquidation law, which the banking sector adamantly opposes, arguing that the crisis is systemic rather than due to insolvency. Banks claim that depositors’ funds remain locked in the Central Bank and that the state must take responsibility for their return.

Bringing the debt-to-GDP ratio down to at least 100%, while it currently exceeds 500%, according to IMF figures.

Restructuring the public sector, which employs 20–30% of the workforce, and introducing private sector participation in key industries such as electricity, telecommunications, and transportation. However, these reforms remain unlikely as long as regulatory bodies—legislated 25 years ago—remain inactive due to the absence of enforcement decrees.

The New "Gray List" Obstacle

Adding to these already daunting challenges, the IMF has demanded enhanced governance, anti-corruption measures, and stronger anti-money laundering and counterterrorism financing frameworks to improve transparency and accountability. However, this has become even more difficult following Lebanon’s inclusion on the Financial Action Task Force (FATF) gray list for money laundering in late 2024, making it nearly impossible to exit before 2026.

The Largest Loan Package Yet

The 2022 IMF Staff-Level Agreement with Lebanon fell under the Extended Fund Facility (EFF) framework, providing $3 billion over four years to address severe balance-of-payments imbalances and sluggish growth. If Lebanon had met the IMF's preconditions, the allocated amount could have doubled.

"The EFF program allows countries to borrow up to six times their IMF quota," Rachid explained. Given that Lebanon’s quota is $825 million, its potential borrowing capacity could have reached $5 billion.

However, increasing the loan amount depends on Lebanon’s ability to service its debt and achieve a primary budget surplus to cover interest payments and future obligations. Furthermore, the IMF’s Executive Board is firm in refusing to lend to countries where the debt-to-GDP ratio exceeds 150%, a threshold Lebanon has far surpassed.

Reforms Matter More Than the Money

Many argue that Lebanon no longer needs an IMF agreement. In 2024, the country gained $5 billion in additional gold reserves, bringing the total to $24.1 billion, up from $19.17 billion the previous year. Meanwhile, the Central Bank boosted its foreign currency reserves by $1.7 billion—about 60% of the IMF loan Lebanon was set to receive.

However, a senior financial source, speaking on condition of anonymity, emphasized that implementing reforms is far more critical than securing IMF funding:

"Without an IMF agreement, Lebanon’s political class will continue to delay banking, debt, and public sector restructuring. This may appear to protect depositors, but in reality, it serves only the banks and ruling elites. Compensation plans for depositors will lead to the same financial losses, except that no one will be held accountable for the disappearance of public funds, allowing the guilty to escape justice."

On a broader scale, the continued absence of reforms will keep Lebanon’s credit rating in the red, blocking access to global financial markets and hampering investment inflows. Worse still, there is growing concern that the government may resort to borrowing from the Central Bank to finance a bloated and mismanaged public sector, fueling further corruption, monetary expansion, and economic instability.