Bank loan

Lebanon nearly $150m loan from World Bank, says economy minister

Lebanon is close to an agreement with the World Bank on a $150 million loan for food security and to stabilize bread prices for the next six months, the country’s economy minister said.

Amin Salam said he was “optimistic” about talks with the IMF.

“The work is in progress and the train is moving forward. I am optimistic,” he said.

Salam said the IMF was focusing on three sectors – power, transport and high-speed internet – that could help revive the economy.

He said the government had no immediate plans to lift bread subsidies, especially for the flour used in making Arabic flatbread, the main staple in Lebanon.

The country’s economic crisis has been described as one of the worst in modern history. Lebanon imports most of its wheat and has faced shortages in recent weeks as Russia’s war in Ukraine drives up oil and food prices around the world.

There were fears the government could lift subsidies on wheat as foreign exchange reserves fall to critical levels at the central bank. Any lifting of subsidies would sharply increase the price of bread in a country where more than three-quarters of its six million people, including one million Syrian refugees, live in poverty.

“We are working with the World Bank to keep the market stable for the next six months by securing $150 million,” Salam told AP.

He said the agreement with the World Bank would stabilize the price of bread and wheat until a ration card policy is in place so those in need can benefit.

Wheat shortage affects Lebanese bakeries – in pictures

Mr. Salam said the subsidies cannot last forever, especially for flour used to make pastries and sweets. He said such policies have been implemented in Egypt and other countries where subsidies have been lifted for wheat used in certain products and left for bread.

Meetings are scheduled with World Bank officials on Wednesday, Salam said. Lebanon will then propose final recommendations to the bank’s board of directors.

He said the war in Ukraine is forcing Lebanon to find new sources of wheat that are far away and more expensive.

Earlier this month, Lebanon and the IMF reached an agreement in principle on comprehensive economic policies that could eventually pave the way for some relief for the country after Beirut implements far-reaching reforms.

Breaking with the post of Prime Minister, he proposed to the governor of the central bank Riad Salameh to leave his functions.

“His situation has become precarious,” Mr. Salam said.

Mr. Salameh, in office since 1993, is the subject of investigations in Lebanon and in several European countries on possible cases of money laundering and embezzlement. The governor is protected by several senior officials, including the prime minister and the speaker of parliament.

“I am for change,” Mr. Salam said. “No one is irreplaceable.”

Updated: April 20, 2022, 7:45 a.m.