[News] Adviser to the Prime Minister of Lebanon: The new parliament will study the requirements of the agreement with the IMF

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BEIRUT (Reuters) - An adviser to Lebanon's prime minister said on Friday that the bulk of a package of reforms that the International Monetary Fund wants to enact before approving a financing deal for the country will be left to the new parliament to study, a sign that little may be done before the 15th general election. May.

On Thursday, the International Monetary Fund announced the draft financing agreement, but said its board of directors would not decide whether to approve it until Beirut enacts a set of reforms, including measures the ruling powers have long been unable to implement.

The International Monetary Fund agreement is widely seen as the only way for Lebanon to begin to emerge from the financial and economic collapse, the biggest destabilization crisis since the 1975-90 civil war.

While the Lebanese leaders praised the initial agreement and said that they are ready to make it a success, many analysts questioned the intransigence of Lebanon's intransigent parties on reforms that have long been reluctant or difficult to agree on.

Legislative elections are seen as another obstacle to the implementation of the agreement. After the elections, a new government will have to be formed, a process that usually takes many months.

Nicholas Nahas, a senior lawmaker and advisor to Prime Minister Najib Mikati, indicated that there are only a few weeks left before the elections and that MPs are busy with their electoral campaigns.

On the reforms, he said, “This was not supposed to be done in a few weeks, and no serious person will say that it should be done in this time frame,” adding that Parliament may approve a law establishing exceptional and temporary controls on bank transfers and cash withdrawals (Capital Controls). ) and the budget law before the elections.

"The agreement is a kind of benchmark for what should come after the elections. So, after the elections, parliament will start studying these measures quickly and then we'll see how we move forward," he added.

Before referring the agreement to the International Monetary Fund’s board of directors, the Fund said that the authorities had agreed to complete procedures, including the approval of the Council of Ministers, to restructure banks that recognize and treat large losses in the sector, while protecting small depositors and limiting recourse to public resources.

Lebanon's political and financial elite have been at odds over such a plan for two years, particularly the question of how to distribute about $70 billion in losses between banks, the state and depositors.

Central Bank of Lebanon Governor Riad Salameh told Reuters on Friday that he hoped the conditions of the International Monetary Fund would be met and that the central bank had "co-operated and facilitated the fund's task," describing the agreement as a "positive event for Lebanon".

"The agreement with the International Monetary Fund will contribute to unifying the exchange rate," Salameh told Reuters.

* Fears of the collapse of the state

Goldman Sachs said the reforms are economically and politically difficult, "but no more than restructuring local banks in our view".

"Allocation of losses between the government, bank shareholders and depositors is a politically challenging question that is unlikely to be resolved easily (or quickly) from our point of view," he added in a note.

He said the agreement was an "important step forward", but it hinted at something hopeful "more than a promise of financial assistance in the near term."

Mike Azar, an expert on financial affairs in Lebanon, said the deal lacked details, including any solutions, and would be promoted among voters as "a victory when in fact it is a non-binding statement of intent that is not accompanied by anything concrete."

"It is unfortunate that the International Monetary Fund agreed to give the government a hollow victory just before the elections," he added.

Donors want Lebanon to address the root causes of the crisis, including state waste and corruption, before releasing aid.

The United States welcomed the agreement and urged Beirut to make reforms. France called it an "important first step".

On Thursday, Kuwait and Saudi Arabia, once major donors to Lebanon, announced that their envoys would return to Beirut, an improvement in relations strained by the influence of Iran-backed Hezbollah.

After his meeting with President Michel Aoun, Patriarch Bechara Boutros Al-Rahi linked the IMF agreement to the return of the Gulf envoys, saying that the steps "complement each other."

"This matter goes in the same direction, especially since the countries of this council always express their willingness to stand by Lebanon and help it, so there is no contradiction but rather integration," he added.

Andrew Tabler, a fellow at the Washington Institute for Near East Policy, said the two steps reflect the same thing, "which is that concern about the collapse of the Lebanese state is growing in the West and in the region."

"I doubt that (Lebanese politicians) will make the hard choices. They usually don't," he added.

(Additional reporting by Tom Perry and Inas Al-Ashry - Press reporting for the Arab News Leila Bassam from Beirut - Editing by Amal Abu Al-Saud)