Lebanon's financial crisis and the International Monetary Fund

Abstract

This study addresses the reasons behind the failure of the Hassan Diab Government in Lebanon (January 2020-September 2021) to present a comprehensive and credible package of reforms to the International Monetary Fund (IMF). The study reviews Lebanon’s economic reality relying on both quantitative and qualitative data. To clearly show the lessons that can be drawn from each of these cases for Lebanon, the study also examines the experiences of other countries that faced financial crises and their relation with the IMF. The study’s principal argument is that the Hassan Diab Government failed to develop and adopt a robust and persuasive package of reforms due to multiple internal and external factors. The main set of challenges stemmed from the domestic environment, characterized by a struggling economy, deteriorating social conditions and rising poverty, internal political divisions, and hardly any trust in the Government and ruling political and economic elite. Furthermore, the regional and international players complicated the Diab Government’s task. The Government was largely unsuccessful in garnering much needed external financial support – which would have enhanced the prospects of adopting a robust reform package – due to both political and economic reasons.