Lessons for Lebanon from its struggling neighbours

IT IS PROBABLY the first time in years that Lebanon has wanted to turn down a loan. With the economy in free fall the country’s new government, seated in January after months of horse-trading, has reluctantly turned to the IMF for help. They held a first round of talks on February 20th. For now Lebanon seeks only technical advice on managing a public debt that exceeds 150% of GDP. Politicians are keen to resist money from the fund, because it would come with strings attached. But it may be necessary. Economists fret that Lebanon could run out of hard currency by the end of the year, leaving it unable to pay for needed imports.

Before they negotiate an agreement, though, Lebanon’s leaders might look at their neighbours. Economic crisis has been the norm in several Arab states for the past decade. Three of them took loans from the IMF. Egypt signed a $12bn deal in 2016 and is discussing a follow-on programme, though probably a non-financial one. Jordan and Tunisia each received two loans. (Morocco was given several precautionary lines of credit but did not tap them.) Put another way, of the Arab states without significant oil and gas revenue, more than half have needed IMF support since 2010.

They have won praise for enacting difficult fiscal and monetary reforms. To meet the requirements of its loan Egypt floated its...

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