Lebanon has not yet reached an agreement on a new IMF program. In an October 1, 2026 briefing, the Fund said further progress on three reforms is needed: bringing the Bank Resolution Law into force, adopting an appropriate Financial Gap Law consistent with international standards, and producing a debt-sustainable 2027 budget and medium-term fiscal framework.
What the IMF says Lebanon must do
IMF spokesperson Julie Kozack described these measures as part of the path toward a possible program, not as terms of an agreement already reached. The three milestones are related, but each addresses a different part of Lebanon’s financial and fiscal problems.
| Milestone | What the IMF said | Status in the October 1 briefing |
|---|---|---|
| Bank Resolution Law | Enter into force | Parliament approved amendments on August 12, 2026. The president referred the law to the Constitutional Council, so the briefing did not establish that it was in force. |
| Financial Gap Law | Be appropriate and consistent with international standards | The briefing did not report that the law was complete. |
| 2027 budget and medium-term fiscal framework | Be consistent with debt sustainability | The IMF called for continued progress; it did not say the budget and framework had met this test. |
Bank Resolution Law: approval is not entry into force
The IMF said the law passed by Parliament was consistent with international standards, while noting that the president had referred it to the Constitutional Council. The Fund said it would assess any changes resulting from that review and advise the authorities on whether they remained consistent with international standards. The October briefing did not say the Council had completed its review or that the law had entered into force. IMF, October 1, 2026
Financial Gap Law: standards still matter
The IMF called for an appropriate Financial Gap Law consistent with international standards. The briefing did not announce a final law or describe its completed contents. Its status should therefore be treated as unresolved, rather than as a reform Lebanon has already completed.
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Budget and fiscal framework: a debt-sustainability test
The Fund tied the 2027 budget and medium-term fiscal framework to debt sustainability. In practice, the stated test is broader than whether an annual budget is passed: the framework must support a credible fiscal path over time while accounting for public priorities.
What the IMF recommended for the fiscal plan
After a September 15–18, 2026 mission to Beirut led by Ernesto Ramirez Rigo, the IMF welcomed work on a medium-term fiscal framework but said more work was needed to prioritize and sequence measures and integrate capital and social spending needs. The Fund said a credible framework could anchor annual budgets, restore fiscal sustainability, and make room for reconstruction and social protection. IMF, September 18, 2026
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- Raise VAT to 12 percent: The mission recommended enacting the proposed increase; it was a recommendation, not a report that the rate had already changed.
- Account for foreign-financed spending: The IMF called for recording all such spending comprehensively in the 2027 budget.
- Prioritize urgent needs and investment: The mission called for prioritizing support for internally displaced people while making room for capital spending.
- Avoid unfunded pay adjustments: It cautioned against further ad hoc salary and pension increases without compensating revenue measures. Any adjustments, it said, should be considered within a comprehensive fiscal framework.
The Fund’s February 2026 statement had also described a medium-term framework as a way to support bank restructuring, sovereign debt restructuring, and expanded social and capital spending. It emphasized revenue mobilization and tax policy, including a more modern and effective income tax law. That earlier context does not replace the October briefing’s three current milestones. IMF, February 13, 2026
Why the reforms matter amid economic strain
Lebanon’s reform discussions are taking place against renewed economic pressure. The World Bank projected that the economy would contract by 6.4 percent in 2026, saying renewed conflict had reversed the fragile stabilization and recovery momentum recorded in 2025. This is a projection published on August 21, 2026—not a final measurement of 2026 GDP. World Bank, August 21, 2026
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The IMF’s 2026 governance diagnostic examines fiscal governance, financial-sector oversight, central-bank governance, rule of law, and anti-money-laundering, and recommends a sequenced, country-tailored reform agenda. It provides broader institutional context, but the October briefing did not present every diagnostic recommendation as an additional condition for a new program. IMF, 2026 governance diagnostic
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What is—and is not—settled
As of the October 1 briefing, discussions were continuing and the Fund described required progress toward a possible program. Parliament’s approval of amendments to the Bank Resolution Law was one step, but the pending Constitutional Council review meant that entry into force had not been established. The briefing also did not establish a completed Financial Gap Law or a debt-sustainable 2027 budget and medium-term framework. The Council’s eventual decision, the final status and content of the Financial Gap Law, and whether these milestones will lead to an agreement remained open.
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