The IMF and World Bank condition Lebanon’s reconstruction funds on its normalization with Israel and Hezbollah’s disarmament. A key meeting revealed that financial aid depends on specific reforms. U.S. support for normalization was also expressed, alongside the need for Lebanese financial restructuring to unlock EU aid. Lebanon’s reconstruction needs $6-7 billion, with challenges from U.S. pressure on funding flows.
The International Monetary Fund (IMF) and the World Bank are reportedly linking reconstruction funds for Lebanon to the country’s engagement in “normalization” with Israel and the disarmament of Hezbollah. A recent meeting between acting Banque du Liban Governor Wassim Mansouri and IMF Managing Director Kristalina Georgieva revealed that Lebanon’s access to financing will depend on specific actions and a defined timeline. This aligns with anticipated political demands for normalization and disarmament.
U.S. Special Envoy to West Asia, Steve Witkoff, expressed optimism regarding Lebanon and Syria potentially joining normalization efforts with Israel. Witkoff stated that Lebanon could participate in the Abraham Peace Accords, noting significant changes are occurring in the region.
In 2022, a critical agreement was reached between the IMF and Lebanon for an Extended Fund Facility valued at approximately $3 billion, contingent upon considerable financial reforms. This agreement, however, has stalled amid ongoing crises and entrenched corruption in Lebanon.
Recently, Lebanese Finance Minister Yassin Jaber announced that the World Bank is finalizing a preliminary plan for a $1 billion reconstruction initiative aimed at rebuilding infrastructure damaged by conflict. This includes an initial disbursement of $250 million for Beirut’s recovery.
The World Bank has emphasized the necessity for political and financial reform to expedite fund approval at its upcoming Executive Board meeting. Additionally, the European Union connects its financial assistance to reforms in Lebanon’s banking system, freezing part of a €500 million aid package pending satisfactory progress.
After the recent conflict, estimates indicate that Lebanon requires approximately $6 to $7 billion for total reconstruction. While Hezbollah has provided significant funding for restoration efforts, its capacity to do so has been hindered by U.S. pressure to restrict financial flows.
The IMF and World Bank have made the provision of reconstruction funds for Lebanon contingent upon the country’s normalization with Israel and Hezbollah’s disarmament. While financial aid remains crucial amidst Lebanon’s dire need for reconstruction, ongoing political challenges and demands from international organizations complicate the process. Both the IMF and the World Bank are insisting on substantial reforms, highlighting the intertwined nature of financial support and regional politics.
Original Source: thecradle.co