Lebanon’s economic recovery remains uncertain following the devastating war with Israel, which further exacerbated an already severe financial crisis. As the International Monetary Fund (IMF) prepares to reengage in negotiations for a stabilization program, experts and watchdog groups are urging the adoption of policies that ensure equitable recovery and avoid regressive fiscal measures. A new report by the Arab Watch Coalition outlines key recommendations for Lebanon’s economic recovery, emphasizing the need for structural reforms, transparency, and equitable policies.

Institutionalized Fiscal and Monetary Accountability

The Arab Watch Coalition has called for robust accountability mechanisms to prevent opaque financial governance.

“Parliamentary oversight of IMF agreements must be enshrined into law,” the group stated, emphasizing the need for independent audits of public debt transactions.

Additionally, the Central Bank of Lebanon should be subjected to independent reviews to ensure that monetary policies prioritize sustainable economic growth rather than benefiting entrenched elites.

Debt Restructuring Without Financialization of Recovery

With Lebanon’s debt crisis at the forefront of economic concerns, watchdog groups are advocating for a progressive framework for loss distribution.

“Large-scale financial stakeholders and politically exposed persons (PEPs) must absorb the majority of the losses rather than ordinary depositors,” the Arab Watch Coalition stressed.

The organization also called for legal measures to prevent capital flight and to systematically trace and repatriate illicitly transferred funds. It warned against austerity measures as a precondition for debt relief, urging instead a broad-based approach to economic stabilization.

Exchange Rate Unification With Inflation Controls

Lebanon’s multiple exchange rates have long fueled economic instability, and the IMF is expected to push for unification. However, experts insist that this must be accompanied by measures to protect real wages and curb inflation.

“Any unification plan must include wage indexation policies, targeted interventions for essential imports, and oversight of the foreign currency market to prevent speculative manipulation,” the report noted.

Tax Reforms to Reduce Structural Inequalities

Fiscal reforms are seen as critical to restructuring Lebanon’s economy. The Arab Watch Coalition has called for progressive taxation measures, including financial transaction taxes on speculative trades, property tax reforms, and stricter enforcement of tax collection from offshore holdings.

“The IMF should condition financial assistance on tax justice reforms rather than resorting to VAT hikes and indirect taxation that disproportionately impact the middle and lower classes,” the group warned.

Public Sector Revival as an Economic Pillar

Decades of privatization have weakened Lebanon’s public services, and experts argue that restoration is key to economic recovery. The Arab Watch Coalition emphasized that “public sector investment must be restored, with dedicated budget lines for healthcare, education, and public transport.” The group also rejected privatization as a prerequisite for fiscal consolidation, advocating instead for efficiency and accountability in public service delivery.

Anti-Corruption Measures as a Prerequisite for Stability

Structural anti-corruption measures are deemed essential for Lebanon’s recovery.

“Economic stabilization is impossible without an independent anti-corruption agency with prosecutorial powers and robust whistleblower protection laws,” the report stated.

It also called for judicial independence in handling financial mismanagement cases, including those related to the Beirut port explosion and banking sector collapse.

Industrial and Agricultural Development to Revive the Economy

Shifting away from a rentier economy, Lebanon must reinvest in industry and agriculture, according to the Arab Watch Coalition. The IMF should prioritize infrastructure projects that support local manufacturing and agricultural self-sufficiency.

“Interest-free credit lines for cooperative agricultural projects and high import tariffs on sectors where local production is feasible are necessary steps,” the group recommended.

Transparent and Equitable Post-War Reconstruction

Post-war reconstruction must avoid repeating past mistakes, where elite interests dominated recovery efforts.

“The IMF and Lebanese government should establish an independent reconstruction agency with a transparent funding allocation mechanism that prioritizes social infrastructure over elite-driven real estate speculation,” the report urged. Real-time public reporting of aid disbursements is also essential to prevent misallocation.

Banking Sector Overhaul to Restore Depositor Confidence

Lebanon’s financial crisis has left depositors with limited access to their savings, prompting calls for urgent banking sector reforms.

“Capital control laws must be enacted to protect depositors, and forensic audits of commercial banks should determine accountability for financial mismanagement,” the Arab Watch Coalition stated. A tiered recovery scheme prioritizing small and middle-tier depositors over politically connected creditors is also necessary to ensure a fair resolution.