Lebanon’s sovereign wealth fund plans face delay

A parliamentary session in Lebanon to debate the creation of a sovereign wealth fund (SWF) has been cancelled following a boycott from the two main opposition parties.

The creation of an SWF and a new law to limit the flow of capital out of the country are conditions imposed by the International Monetary Fund (IMF) in order to unlock funds needed to take Lebanon out of a financial crisis that began in 2019.

However, the country has been without a president since October 2022, and despite voting on the issue 12 times, a successor has yet to be elected by the sharply divided parliament.

The latest setback saw two Christian political parties, the Free Patriotic Movement and Lebanese Forces, refuse to vote in the absence of a president. Consequently, only 53 of the 128 members of parliament showed up, and no date for a new session has yet been given.

The formation of a SWF was approved by the parliament’s finance and budget committee in July. The fund will ostensibly be used to manage revenues that come from oil and gas exploration. Drilling is set to begin in Lebanese waters following a US-brokered deal with Israel over a disputed maritime border.

Sovereign wealth funds have become an important feature for Mena states looking to use the proceeds from gas and oil to diversify their economies and finance domestic infrastructure projects.

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