During its visit to Lebanon the week of March 20 as part of an Article IV mission (under the surveillance mandate vis-à-vis member countries), the IMF reported that the economic situation continues to deteriorate. deteriorate, for lack of rapid decisions and measures by the Lebanese authorities.
Since his last mission in September 2022, inflation has accelerated, the banking system remains paralyzed, the public sector is gradually collapsing, and the public deficit remains high.
In this context, the IMF deplores the lack of progress on the priority actions requested in April 2022 and the lack of political will on the part of the Lebanese authorities. For the IMF, it is urgent to reform the Lebanese economic and financial system, in particular through a medium-term budgetary strategy and a credible strategy for restructuring the financial sector.
A unification of exchange rates and an improvement in monetary policy should also strengthen confidence in the Lebanese currency and financial system. However, the IMF remains committed to supporting Lebanon, and stresses that the collaboration and support of multilateral and bilateral partners are also essential to the success of the authorities’ reform implementation.
Rise in inflation since 2023
According to the Central Administration of Statistics (CAS), the average consumer price index (CPI) increased by +156% during the first two months of 2023 compared to the same period of 2022. This increase is however lower than that recorded over the same period in 2021 (+227%).
Inflation, calculated on a year-on-year basis, which has been falling since June (+210%), seems to be on the rise again in February 2023 (+190%). However, these aggregate figures must be interpreted with caution because the weighting of the consumption basket has not been updated since 2012 (the “water, electricity, gas” item thus representing only 12% of the basket and the “transport” item 13%).
The rise in prices remained particularly marked in December in the sectors of communication (x4.8), energy and water (x3), food (x3.6) and transport (x3).
Source Embassy of France in Lebanon