Abu Dhabi, UAEThursday 1 October 2020

IMF’s discussions with Lebanon focused on audit of central bank's balance sheet

Fund says it is ready to redouble efforts to help country resolve its economic crisis

The International Monetary Fund is ready to redouble its efforts to help Lebanon. Reuters
The International Monetary Fund is ready to redouble its efforts to help Lebanon. Reuters

The International Monetary Fund's discussions with Lebanese authorities have been focused on the need for an accounting and financial audit of the balance sheet of the country’s central bank to help assess its assets and liabilities.

Gerry Rice, the fund’s director of communications and spokesman, said the audit will also help “assess the impact of the central bank’s financing of government operations and the central bank’s financial engineering on its own at net worth”.

“This is an important part of assessing past losses that are a part of the central bank’s balance sheet,” Mr Rice said.

Lebanon’s caretaker finance minister Ghazi Wazni last week hired Alvarez & Marsal to carry out forensic auditing and KPMG and Oliver Wyman to perform other accounting and financial assessments.

The country faces its worst economic crisis since in three decades. It defaulted on eurobonds worth $31 billion (Dh113.8bn) in March, a move that exacerbated its economic woes and forced its currency to fall by 80 per cent against the US dollar on the black market.

An explosion in Beirut, which killed 190 people and wounded more than 6,000 on August 4, is expected to sharpen the country's economic contraction to 24 per cent this year, according to the Institute of International Finance.

The government turned to the IMF for a $10bn bailout in May but talks stalled due to haggling among the country’s political class.

“We stand ready to engage with the new government after its formation is completed and Kristalina Georgieva [IMF managing director] said recently [that] we are ready to redouble our efforts to help Lebanon and the people of Lebanon overcome the social and economic crisis it faces,” Mr Rice said.

The country's public debt stood at $93.4bn at the end of June while inflation surged to about 112 per cent in July, from about 90 per cent a month earlier, according to official data.

Updated: September 12, 2020 03:33 PM

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