Al-Akhbar wrote: Today, the meetings of the International Monetary Fund delegation begin with a number of officials in Lebanon to discuss an agenda that includes two basic matters, the first of which is the medium-term financial framework and the draft financial gap law or the loss distribution project, knowing that the latter is the main focus of these meetings. The research will focus on a basic issue related to Article 4 of the Gap Law, as the Fund proposes to appoint a temporary director for each bank that will undergo the restructuring process until it is completed, while officials in Lebanon, led by the Governor of the Bank of Lebanon, reject this matter.
For some time now, a committee assigned by Prime Minister Nawaf Salam has been working to reconsider the wording of the law known as the Financial Gap Law, or as it was called in the government draft referred to the House of Representatives, “Financial Regularity and Deposit Recovery.” According to the data, the most important discussion began in light of the Governor of the Bank of Lebanon, Karim Saeed, withdrawing from the committee and informing those concerned in writing of his decision. Saied believes, as reported from his circles, that this committee does not have its decision, but rather handed it over to the International Monetary Fund in its entirety, which eliminates any negotiating margin for Lebanon in drafting the law and distributing losses.
The ruler’s position is not new because he had previously opposed, along with the banks, the principle of the hierarchy of distribution of losses, which must begin with bank capital and later move to deposits. The reason, as reported by circles, is that he does not want to catch a time bomb called dealing with huge losses for about 30 banking groups, and that incurring this size of losses does not allow him to quickly reactivate the banking sector, but rather will expose him to various types of political and social blackmail.
As for the committee’s discussions, they reached Article 4, which is actually the first. The articles preceding them are general and refer to the purpose of the law, its terms, definitions, and the scope of its application. As for Article Four, it comes under the second section entitled “Rebalancing and Solvency of the Banking System” and refers to rebalancing procedures based on conducting a review of the quality of assets in banks, then distributing losses within the principle of hierarchy demanded by the International Monetary Fund, and the next steps of recapitalization, followed by procedures for purifying irregular assets, or referring any bank that is unable to achieve these requirements to the “second chamber” that was approved within the Banking Restructuring Law, which means referring it to liquidation.
According to informed sources, it appears that there is a new settlement being worked on with the International Monetary Fund, and it will be the focus of discussions during this visit. This settlement includes the appointment of a supervisory director or coordination director in each bank, who does not have the powers of the temporary director, but rather has powers similar to supervisory and coordination between the bank and the Bank of Lebanon. Will the IMF agree to more settlements?
