IMF to accelerate Iraq and Lebanon programme talks as regional support expands

The International Monetary Fund is advancing programme discussions with Iraq and Lebanon as part of broader support to vulnerable Middle East and North Africa economies, managing director Kristalina Georgieva said at the IMF and World Bank annual meetings in Bangkok on 17 October. The fund will provide Iraq both financing and policy support, while intensive discussions with Lebanese authorities have made significant progress toward a programme, she said.

Member states call for increased support to war-affected economies#

IMF member countries called for increasing support to countries facing short-term financing challenges caused by negative spillovers from wars and high energy prices, according to a statement issued by the International Monetary and Financial Committee. The statement, chaired by Saudi Finance Minister Mohammed Al-Jadaan, said escalating conflicts and trade tensions could further disrupt critical trade routes, exacerbate commodity price pressures including in refined energy products, and worsen energy and food security. Member economies agreed to support countries that undertake reforms and address debt vulnerabilities, with specific attention to low-income and vulnerable middle-income countries and conflict-affected states.

Iraq seeks investment as economic pressures mount#

Iraq has been facing one of its most serious economic and security situations since the Iran war broke out in February, according to the fund's assessment. Baghdad has been driving efforts to boost its standing, with Prime Minister Ali Al Zaidi appealing to the world to invest in Iraq at the UN General Assembly in New York in September as he pitched his economic and anti-corruption plans. The IMF's Georgieva said the fund would support Iraq very firmly with both financing and policy assistance.

Lebanon programme talks show progress on bank resolution framework#

Intensive discussions with Lebanese authorities have made significant progress toward a programme, with a bit more work to do together, Georgieva said. The IMF said this month it would assess any potential changes to Lebanon's bank resolution law to ensure they were consistent with international standards. Lebanon's central bank governor Karim Souaid told Bloomberg on Wednesday he was expecting a breakthrough by the end of 2026 in IMF talks on the law, which stipulates it would repay depositors whose savings were entangled in the country's financial collapse. The World Bank projected Lebanon's economy to contract by 6.4 percent in 2026.

Regional reform efforts cushion war impact#

Governments in the Gulf have pursued reforms that allowed them to cushion the impact of the shock that has affected them, Georgieva said. It would have been much worse if many of them had not done reforms and been building buffers, she added. The IMFC statement said uncertain impact of advanced intelligence technologies, along with rising bond yields in major economies that spill over to highly indebted economies, could amplify macro-financial vulnerabilities.