IMF, World Bank reconstruction funds for Lebanon contingent on 'normalization': Report
Western officials have stated that Lebanon's access to international funding will be tied to political pressure to normalize ties with Israel and to disarm the resistance
The International Monetary Fund (IMF) and World Bank are seeking to tie reconstruction funds for Lebanon to “normalization” with Israel and Hezbollah's “disarmament,” according to informed sources who spoke with Al-Akhbar.
During a recent meeting between acting Banque du Liban (BDL) governor Wassim Mansouri and IMF chief Kristalina Georgieva, the western official reportedly indicated that “Lebanon’s access to funding from the IMF and donor countries will … be linked to specific steps and procedures with a specific time frame and objective.”
“According to those familiar with the matter, these steps coincide with expected political pressures under the title of ‘normalization’ and ‘disarmament,’” the Lebanese daily reported on 26 February.
A day prior, Steve Witkoff, the US special envoy to West Asia, proclaimed he “sees potential” for Lebanon and Syria to join a normalization deal with Israel.
“Lebanon, by the way, could actually mobilize and come into the Abraham Peace Accords, as could potentially Syria. So, so many profound changes are happening,” Witkoff said Wednesday during an event in Washington for the American Jewish Committee.
In 2022, the IMF and Lebanon reached a staff-level agreement for a four-year Extended Fund Facility (EFF) valued at approximately $3 billion, contingent upon sweeping reforms of the financial sector. However, this deal has not progressed due to Lebanon's ongoing crises and deep-rooted corruption.
Earlier this month, Lebanese Finance Minister Yassin Jaber announced that the World Bank had prepared a “preliminary plan” for a $1 billion reconstruction project to rebuild infrastructure and remove debris from the Israeli war on Lebanon. The project includes an initial funding commitment of $250 million for Beirut.
According to Al-Akhbar's sources, World Bank representatives have requested that the required procedures be expedited to approve the fund at the World Bank’s Executive Board meeting on 25 March, contingent on western demands for financial and political reform.
The EU has also conditioned funding for Lebanon on the “need to restructure its banking system,” holding up the disbursement of 500 million euros in aid that is part of a 2024 deal signed between Beirut and Brussels to reduce the flow of refugees into Europe.
Half of the money was paid out last August. Still, the remainder will be subject to “some conditions,” EU Commissioner for the Mediterranean Dubravka Suica said during a visit to Lebanon.
“The main precondition is the restructure of the banking sector... and a good agreement with the International Monetary Fund,” she said after meeting Lebanese President Joseph Aoun.
Following Israel's brutal war on Lebanon, estimates say the country today needs an estimated $6-7 billion for full-scale reconstruction.
The Lebanese resistance has thus far provided the majority of the funding to rebuild southern Beirut and Lebanon's southern villages, allocating an estimated $650 million for housing and restoration – of which around $250 million was disbursed following the dispute over Iranian flights being barred from Beirut airport.
However, Hezbollah's ability to disburse funds has repeatedly been hampered, with intense US pressure on Lebanon and Iraq to stifle the flow of funds for the resistance.