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IMF’s discussions with Lebanese authorities focused on audit of balance sheet of country’s central bank

Sep 12

IMF’s discussions with Lebanese authorities focused on audit of balance sheet of country’s central bank

The Washington based lender to ‘redouble’ efforts to help Lebanon's economic crisis

The International Monetary Fund’s discussions with Lebanese authorities are focused on the need for an accounting and financial audit of the balance sheet of the country’s central bank to help assess its assets and liabilities.

Gerry Rice, the IMF’s director of communications and spokesman said the audit will also help “assess the impact of the central bank’s financing of government operations and the central bank’s financial engineering on its own at net worth.”

“This is an important part of assessing past losses that are a part of the central bank’s balance sheet,” Mr Rice, said in a statement.

Lebanon is facing its worst economic crisis since its independence in 1943. It defaulted on eurobonds worth $31 billion (Dh113.8bn) in March, which led its currency, pegged to the US dollar since 1997, to lose more than 80 per cent of its value against the greenback in the black market.

An explosion in Beirut, which killed 190 people and injured more than 6,000 on August 4, is expected to further compound Lebanon’s economic woes.

The government turned to the IMF for a $10bn bailout, but talks have stalled due to the fractious politics of the country.

“We stand ready to engage with the new government after its formation is completed and Kristalina Georgieva [IMF managing director] said recently we are ready to redouble our efforts to help Lebanon and the people of Lebanon overcome the social and economic crisis it faces,” he added.

The Institute of International Finance projected that Lebanon’s economy will shrink 24 per cent this year, compared with an earlier forecast of 15 per cent as a result of the blast.

Earlier this month, the eldest son of former prime minister Rafik Hariri said a forensic audit of Lebanon’s central bank needs to take place before any judgment can be made about the regulator’s governor Riad Salameh, who is at the centre of the country’s worst economic crisis.

“In the global justice system, you are not guilty, you are innocent until you are proven guilty. We need the transparency of the central bank’s statements. Where did the money go?” Bahaa Hariri said from London in an interview The National. “We need a proper audit from a global auditing firm that tells us exactly what happened and then we put that in front of us and make the call.”

Lebanon’s caretaker finance minister Ghazi Wazni hired Alvarez & Marsal to carry out forensic auditing and KPMG and Oliver Wyman to perform other accounting and financial assessments.

thenational