The IMF and World Bank are linking reconstruction funds for Lebanon to normalization with Israel and disarmament of Hezbollah. A U.S. envoy has highlighted potential for Lebanon to join normalization initiatives. Lebanon’s planned access to IMF funds is stalled due to corruption, while the World Bank has a $1 billion aid package pending reforms. Lebanon needs $6-7 billion for reconstruction, with challenges facing Hezbollah’s funding abilities due to external pressures.
The International Monetary Fund (IMF) and World Bank are conditioning reconstruction funds for Lebanon on the country’s normalization with Israel and the disarmament of Hezbollah. This was revealed by sources to the Lebanese newspaper Al-Akhbar following a meeting between acting Banque du Liban governor Wassim Mansouri and IMF head Kristalina Georgieva. The conditions are tied to specific reform actions and timelines required for Lebanon to gain access to funding.
The U.S. special envoy to West Asia, Steve Witkoff, also indicated potential for Lebanon and Syria to engage in normalization talks with Israel. He suggested that Lebanon could participate in the Abraham Accords, signaling a shift in geopolitical dynamics in the region.
In 2022, Lebanon and the IMF reached a preliminary agreement for a $3 billion Extended Fund Facility, which required extensive reforms to Lebanon’s financial sector. However, progress has stalled due to the country’s ongoing crises and systemic corruption. Meanwhile, the World Bank has proposed a $1 billion project to rebuild infrastructure damaged during conflicts, with an initial funding pledge of $250 million for Beirut.
World Bank representatives have urged the Lebanese government to expedite necessary procedures for fund approval, which are subject to western financial and political reform demands. Additionally, the European Union’s funding for Lebanon is contingent on a restructuring of its banking system, which has delayed the release of €500 million in aid as part of a broader 2024 agreement.
Estimates indicate that Lebanon requires between $6-7 billion for comprehensive reconstruction following recent conflicts. Hezbollah has notably contributed around $650 million towards rebuilding efforts but faces challenges due to U.S. pressures blocking financial support for the organization.
Lebanon’s financial recovery efforts are closely tied to external influences, highlighting the importance of political reform and regional agreements while the country continues to address significant structural issues and humanitarian needs.
The reconstruction of Lebanon hinges on stringent conditions set by international institutions, emphasizing normalization with Israel and Hezbollah’s disarmament. With billions needed for recovery, ongoing political and financial reforms are essential for Lebanon to access vital funding from the IMF and World Bank. The interplay of regional geopolitics and internal challenges significantly impacts Lebanon’s rebuilding efforts, demonstrating the complexities involved in the nation’s recovery journey.
Original Source: thecradle.co
