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IMF warns of significant economic contraction in Lebanon for 2026
Following a mission to Beirut, the International Monetary Fund (IMF) has warned that the Lebanese economy is expected to undergo a significant contraction in 2026. The IMF noted that inflation remains in the double digits and the current account deficit has widened, largely due to rising energy costs.
Regional security tensions, specifically the conflict between Hezbollah and Israel, have caused extensive damage to infrastructure and housing, leading to widespread internal displacement and a decline in living standards. Despite these challenges, the IMF acknowledged that Lebanese authorities have maintained some stability through cautious fiscal and monetary policies.
Regarding financial reforms, the IMF welcomed recent amendments to the law for handling the situation of banks, viewing it as progress toward restructuring the sector. However, the Fund emphasized that further legislative work is needed on financial stability and deposit recovery laws to meet international standards. The IMF stressed that the restructuring process must respect the hierarchy of claims, ensuring depositors do not bear losses before shareholders and junior creditors. Additionally, the Fund urged the implementation of a planned VAT increase to 12% and called for the comprehensive recording of all foreign-funded spending in the 2027 budget.
Entities
Ernesto Ramirez Rigo · Hezbollah · International Monetary Fund · Israel · Lebanon
Claims
What the coverage asserts, and how many sources carry each claim.
- [● 3 SOURCES] The IMF emphasized that the loss-bearing hierarchy must ensure depositors do not incur losses before shareholders and junior creditors. ch23.com · dailynewslb.com · www.alaraby.co.uk
- [● 3 SOURCES] Regional security developments and the conflict between Hezbollah and Israel have damaged the economy and living conditions. ch23.com · dailynewslb.com · www.alaraby.co.uk
- [● 3 SOURCES] The current account deficit has widened, primarily driven by increased energy costs. ch23.com · dailynewslb.com · www.alaraby.co.uk
- [○ 1 SOURCE] The IMF advised that all foreign-funded spending should be comprehensively recorded in the 2027 budget. cbnlb.com
- [● 3 SOURCES] The IMF welcomed recent amendments to the law for handling the situation of banks as a step toward restructuring the sector. ch23.com · dailynewslb.com · www.alaraby.co.uk
- [● 3 SOURCES] Inflation rates in Lebanon remain in the double digits. ch23.com · dailynewslb.com · www.alaraby.co.uk
- [○ 1 SOURCE] The IMF urged Lebanese authorities to implement the planned VAT increase to 12% to fund public sector wage increases. cbnlb.com
- [● 4 SOURCES] The IMF expects a significant economic contraction in Lebanon during 2026. cbnlb.com · ch23.com · dailynewslb.com · www.alaraby.co.uk