IMF Official Urges International Community to Provide Grants to Lebanon

Jihad Azour, director of the Middle East and Central Asia Department at the International Monetary Fund (IMF)  said on Thursday that apart from the human burden of the ongoing conflict in Lebanon, the country "needs the support of the international community" to ease the economic shock it is experiencing, through providing it with "grants" and pushing towards a settlement.

Azour stressed in an interview with Agence France-Presse that "the priority is to protect lives and save people's livelihoods, but also to provide adequate humanitarian assistance to those who have lost everything."

He added, "We encourage the international community, and we encourage Lebanon's friends, to provide grants," calling on the international community to "exert its utmost efforts to solve the problem, in order to alleviate the suffering of the people."

According to UN figures, some 800,000 people have been displaced since Israel stepped up its strikes on Hezbollah targets in Lebanon.

On a broader scale, Azour, a former Lebanese minister, called on the international community to put an end to the conflict in both the Gaza Strip and Lebanon, and to provide the necessary assistance to deal with the "enormous" humanitarian crisis in both.

He said, "We urge the international community and friends of Lebanon to provide grants" to this country, which was already suffering from a very difficult economic situation even before the outbreak of the current war.

"We call on the international community to do everything in its power to put an end to the conflict and reduce the suffering of the population," he stressed.

The United Nations Development Program estimates that the Lebanese economy will lose 9.2% of its GDP, while the International Monetary Fund has not published any growth forecasts for the country in 2024 and 2025 due to the changing situation.

In the context of justifying the difficulty of predicting the direction that the Lebanese economy will take, Azour explained that "there is significant destruction of infrastructure, very significant damage to an agricultural region (in the south of the country), loss of life and destruction of means of production, and in general, a disruption of economic activity."

More broadly, the IMF lowered its forecasts for the region as a whole by 0.6 percentage points compared to its previous estimates issued in April, mainly due to the consequences of the conflict in the Gaza Strip and Lebanon.

However, the direct economic repercussions of these two conflicts, outside the Palestinian territories and Lebanon, remain very uneven, and the countries of the region have generally been able to mitigate their impact, according to Azour.

However, "Jordan was affected by the decline in tourism, a problem that Egypt did not suffer from, which is facing a 70% decline in Suez Canal revenues," costing the Egyptian government lost profits ranging between 6 and 7 billion dollars.

Azour explained that the other country that was affected is Syria, but he pointed out that the IMF, which stopped issuing estimates for this country 15 years ago, "does not have the necessary data" to draw an accurate picture of these repercussions.

Azour pointed out that Egypt is in a position to deal with this new shock, especially thanks to the current IMF program, the value of which was raised "from 3 to 8 billion dollars in April, specifically to help it cope" with the developments.

He said that "the Fund's approach is flexible. But the economic indicators as a whole are improving: growth will accelerate next year and inflation is slowing down" despite the liberalization of exchange rates in the spring, which initially caused a sharp decline in the value of the Egyptian pound.

Azour stressed that "the goal of the program was to allow Egypt to mobilize other resources" that helped it cope with the consequences of the war in Gaza, estimating the total funds it received from various partners, especially the United Arab Emirates, at $34 billion.

He stressed "the importance of rebuilding the economies (in the region) better in order to enhance their resilience."

This requires, in his opinion, better regional integration, by focusing "on the opportunities offered by combating global warming and technologies, in order to attract more investments," an approach that should also have a positive impact on the West Bank and Gaza.