The Lebanese government recently distributed the full Financial & Economic Recovery Program for the Parliament to review, bearing in mind that said program is one of the key requirements by the International Monetary Fund (IMF). The plan’s main objective revolves around inciting economic growth, spurring job creation, lowering poverty rates, and enhancing the level of public services being provided especially in the healthcare, education and electricity sectors. In details, the plan calls for focusing on productive sectors, namely the knowledge economy sector, given its important contribution to economic growth, whilst also securing an appropriate operating environment for such businesses (enhancing financial services, enforcing copyrights laws, providing cheap & high-speed internet and boosting electricity supply). The plan also stresses on achieving debt sustainability and on creating a leeway for high-priority expenditures in the fields of social protection, health, education and infrastructure. In details, and on the short-term, the plan cited the year 2022 budget’s target of a 4.4% deficit to GDP ratio and a 3.3% primary deficit to GDP ratio, noting that the primary balance is estimated to reach a positive level of 1.4% of GDP by 2026 via introducing a set of fiscal measures. Said fiscal measures revolve around enhancing tax compliance (especially for people lying among the high tax brackets), widening the tax base by 10% on an annual basis, reforming custom tax policies, gradually increasing the VAT from 11% to 15% and raising tax levels on non-essential items. Always in the same regard, the plan calls for renting governmental real estate & properties, imposing taxes on vacant real estate, battling tax evasion and exploring the prospects of Public Private Partnerships for some public sector enterprises. On the expenditures front, the reform plan calls for improving expenditure efficiency, reducing the number of contractual employees by 50%, increasing salaries and assistances to public sector employees as current salaries are not enough to cover transportations costs. Always on the expenditures front, the government will also aim at unifying pension systems for public sector employees. Said measures would assist the government in taming the debt to GDP ratio from 455% as at end of 2021 to below the 100% mark by the year 2026 and to the 76% level by the year 2032, with the potential of achieving more ambitious targets in the event economic growth or primary surplus fare better than the conservative scenario. Always in the same vein, the plan points out to the need to restructure Eurobond debt (standing at $33 billion), while also commenting that local currency debt is estimated at LBP 93 trillion, which translates in $3 billion at current (LBP 30,000/USD) exchange rates, raising the total value of debt that needs to be restructured to $36 billion at current market prices. On the monetary front, the plan calls for the unification of exchange rates (probably at the Sayrafa exchange rate in the first phase) in tandem with the implementation of an IMF-backed reform program, and the ratification of a capital control law. Such a move would assist in restoring confidence, taming inflation and ultimately improvingthe value of the local currency. On the balance of payments front, the plan stated that the finalization of an IMF program would secure external funding and would render the negotiations with Eurobond holders easier, as they would be more willing to accept a haircut on nominal value in the event they are confident that they will be able to recover the remaining amount. As far as the financial sector is concerned, the plan pointed out that the gap in the financial sector stands at around $72 billion and that the staff level agreement with the IMF calls for untangling the linkage between the accounts of commercial banks, the Central Bank and the budget, restoring the financial adequacy of the Central Bank and reforming/recapitalizing banks which are deemed to be viable. Accordingly, the financial sector recovery plan centers around the contribution of the government in restoring the adequacy of the Central Bank, respecting the hierarchy of absorption of losses, dissolving non-viable banks, protecting deposits accounts up to $100,000 on the condition that the concerned bank has the capability to do so. The plan nevertheless, mentioned that this deposit protection threshold does not apply on increases in deposits March 31, 2022 and that amounts in excess of $100,000 will be in part lirafied and the remaining part converting the remaining into shares to help in the recapitalization process. As far as the government’s contribution is concerned, the plan states that as per the IMF program, the government would be contributing $2.5 billion to recapitalize the Central Bank. In addition, the plan states that while in theory there should be no linkage between any primary surpluses and the losses of the banking sector, some future governmental revenues can be transferred to the Deposit Recovery Fund in the event PPP and reform programs are implemented in such a way that debt levels better the projected ones in the debt sustainability program. On the deposits front, the plan states that the government is trying to collaborate with the IMF to determine which deposits would be eligible for protection, and that the segregation between eligible and non-eligible deposits can increase the protected amount for eligible deposits. Always in the same regard, the plan pointed out that part of deposits can be converted in a voluntary manner to LBP at a rate below the “Sayrafa” rate, yet said process should be controlled as not to create excess liquidity in the market. Always in the same regard, the plan calls for the establishment of the aforementioned Deposit Recovery Fund (DRF) which will issue economic interest papers to depositors, with part of banks’ assets (such as Central Bank CDs) and any recovered illegal funds being transferred to the DRF. As far as bank restructuring is concerned, the BCC will work with a reputable international company to first assess the capital requirements of the largest 14 banks which control 83% of the banking sector’s assets. Losses will be allocated by order of priority starting with shareholders, subordinated debt holders and related parties before transferring any remaining losses to large depositors. In addition, banks that are assessed as surviving banks will be required to inject fresh capital within a limited period of time in order to adhere to Basel III standards. As for banks that fail to meet capital requirements, they would be encouraged to merge, while those who still fail to meet capital requirements within a specified timeframe will have their license revoked. On the governance front, the plan focuses on combatting corruption by implementing the National Strategy to Combat Corruption. The reform plan stressed on the need  to tackle the issue of EDL namely its financial performance, by eliminating the subsidies which constituted a significant portion of the public debt over the years. Accordingly, the plan calls for raising the tariff, currently sitting at less than half a cent per kilowatt hour, in the near future (within 1 year) while simultaneously increasing electricity supply to 8-9 hours per day by importing electricity and gas from Egypt and Jordan. The plan also calls for boosting electricity supply to 16-18 hours on the medium term (1-2 years) and to 24 hours on the long term (3 years or later) via building new power plants running on gas or on renewable energy, whilst also targeting a 30% share for renewable energy. The plan also stresses on the importance of reducing technical and non-technical losses in the electricity sector, currently at an exorbitant 40%, and on the installation of smart meters in tandem with the increase in electricity supply. On the social protection front, the government will prioritize the protection of the most vulnerable, with the plan indicating that the coverage of the National Poverty Targeting Program (NPTP) is not sufficient for addressing the extreme poverty phenomena that emanated from the multiple crises that struck Lebanon. In this context, the plan indicated that the government has already launched the Emergency Social Safety Net Project (ESSN) which will engulf 150,000 families and ensure education for 87,000 children as well as the Broad Coverage Cash Transfer program which will offer support to those not benefiting from the NPTP. Finally, on the social protection front, the government aims at developing a national record that will achieve synergies between the different support programs as well as eliminating any overlap between said programs, while also increasing the scope of government assistance. As far as the private sector is concerned, the plan stressed on the need to improve the business environment (noting that Lebanon is currently one of the least competitive nations on a global basis), bolstering exports, and supporting other sectors such as digital economy, agriculture, industry and tourism.