Since defaulting on its debt in March 2020, Lebanon’s government has still not reached an agreement with the International Monetary Fund (IMF) on financing to kickstart its economic recovery. While current discussions are stuck on provisions laid out in 2022, there is little public debate about what kind of fiscal adjustments the IMF will require moving forward. The IMF will likely ask for significant cuts in public spending and for revenue-raising measures from the Lebanese government, which is politically paralyzed amid the Israeli war and ongoing occupation of South Lebanon. The September 2026 IMF Executive Board Review of Program Design and Conditionality, which lays out the Fund’s overall program strategy, offers some indications of how these adjustments might be rolled out in Lebanon after a potential new agreement. Of considerable concern is the possibility that the IMF may “frontload” future austerity measures for Lebanon—an approach that has had profoundly negative consequences elsewhere in the region.
The IMF’s Case for Frontloading
On September 14, 2026, the IMF Executive Board concluded its Review of Program Design and Conditionality, a major document that determines the conditionalities, policies, and sequencing of future IMF loan programs. The most significant and potentially problematic decision in the review is the recommendation that fiscal adjustments should, when feasible, be “frontloaded,” requiring countries to implement most of their austerity measures at the start of the multiyear program rather than spreading them across the duration of the loan. Austerity measures can include such controversial policies as raising consumption taxes, cutting the public wage bill, and eliminating subsidies.
The most significant and potentially problematic decision in the review is the recommendation that fiscal adjustments should, when feasible, be “frontloaded.”
The IMF review recommended fewer but potentially deeper structural changes that could aggressively reshape the economies of IMF loan recipients. The idea of deeper structural reforms is hardly new: they were the norm during the structural adjustment programs of the 1970s and 1980s. This so-called shock therapy was later abandoned as a one-size-fits-all approach due to its proven failures. While the IMF now insists that its new approach will be tailored to specific country conditions, its track record leaves room for concern. In the meantime, the shortcomings of frontloading in Southwest Asia and North Africa (SWANA) are already becoming apparent.
Frontloading in Practice: Egypt’s Experience
The IMF’s shift toward frontloading fiscal adjustments and deepening structural reforms is likely to be motivated by three factors. First, the biggest shareholder in the IMF, the United States, has asserted that “stronger adjustments are necessary to strengthen program effectiveness.” Second, the IMF’s program success rate has been declining, as the September 2026 report explains. Third, IMF programs have been facing increasing backlash due to the harsh austerity measures they often involve, which have sparked protests forcing the governments of Kenya and Tunisia, among others, to reverse their austerity measures. The IMF’s shift toward accelerating fiscal adjustments and structural reforms would give publics and stakeholders less time to assess and potentially oppose such reforms. By obliging governments to implement the harshest social measures immediately, it also incentivizes them against retracting austerity policies in response to any popular backlash.
The IMF previously supported frontloaded reforms in Egypt under its 2016 lending program. The 2016 Extended Fund Facility loan, for example, called for a reduction in the fiscal deficit equivalent to 5.5 percent of Egypt’s gross domestic product over three years, with approximately half of this reduction scheduled for the first year. This ambitious program included measures such as introducing a value-added tax, slashing subsidies, and generally reducing public expenditures. The fact that most of the measures were delivered at the outset of the program arguably decreased the opposition’s ability to mobilize. Demonstrators across Egypt protested these painful policy reforms but never succeeded in reversing them. The Egyptian government continued to crack down on civil society even as its policies were accompanied by a deteriorating economic situation for many Egyptians. The poverty rate, for example, increased from 27.8 percent in 2015 to 32.5 percent in 2018. In Egypt, the IMF’s frontloading approach exemplified the idea of short-term pain for long-term gain.
Despite the IMF’s claims of success with frontloading, Egypt is no less dependent on IMF assistance.
Despite the IMF’s claims of success with frontloading, Egypt is no less dependent on IMF assistance. On the contrary, Egypt has continued IMF programs for the past ten years. The Egyptian economy has also not fully recovered. The IMF itself has said that in Egypt, “important vulnerabilities remain, reflecting elevated public debt, large gross financing needs, and a sizable state footprint.” In June 2026, the Egyptian government signaled that it would not seek new IMF financing, perhaps preempting an anticipated public backlash against further structural reforms, which—not coincidentally—would also drastically curtail the role of the Egyptian state, and the Egyptian armed forces, in the economy.
The Risks for Lebanon
Should Lebanon ever reach an agreement with the IMF, the country may prove to be yet another testing ground for the IMF’s frontloading approach in SWANA. Several factors make Lebanon a likely target. The IMF may not trust the Lebanese government to implement what it views as difficult financial and fiscal reforms. The country’s complex political dynamics, combined with the fragile social situation produced by high levels of inequality and poverty, work against a gradual approach to delivering austerity. A formal commitment to frontloading would give the Lebanese government little leeway to reverse unpopular measures.
To avoid such painful austerity, the government in Lebanon could seek to achieve the necessary fiscal adjustments by placing more of the fiscal burden on the wealthiest in society rather than on the middle and lower classes. However, given the numerous problems facing the country today, such an initiative appears unlikely. Instead, the IMF and Lebanese government will likely lock Lebanon and its people into cycles of harmful spending cuts that will heighten social tensions and potentially contribute to future upheavals in the country.
The views expressed in this publication are the author’s own and do not necessarily reflect the position of Arab Center Washington DC, its staff, or its Board of Directors.
