The file of financial deposits has returned to the forefront of economic discussions in Lebanon, following indications of a convergence of views between the government, the Bank of Lebanon, and the International Monetary Fund regarding the main provisions of the draft financial gap law, without reaching a final agreement yet.
Sharq Bloomberg quoted a source close to the Bank of Lebanon, who requested anonymity, that the points of convergence focused on mechanisms for distributing banking sector losses and recapitalizing banks in accordance with international standards. With the aim of restoring depositors’ confidence and resuming lending operations. The parties also agreed on the importance of conducting a deeper assessment of the liquidity available in the financial system accurately, to determine the size of the amounts payable to depositors and their payment schedules.
In the same context, Finance Minister Yassin Jaber seeks to extract an initial agreement at the expert level with the International Monetary Fund, independently of the process of approving the draft law in the House of Representatives. Jaber had confirmed, during a meeting held in Beirut at the beginning of this month, that there was a good opportunity to achieve this progress, according to official minutes seen by “Al-Sharq Bloomberg.”
The strategic importance of the Financial Gap Law lies in the fact that it is the basic foundation for addressing the banking sector’s losses and recovering retained deposits, as a result of the deep crisis that erupted in 2019, which led to restricting depositors’ access to their funds and a complete paralysis of the lending movement. It is noteworthy that Lebanon had concluded an initial agreement with the IMF in 2022, but it faltered in the absence of the required legislative reforms.
For its part, the International Monetary Fund stressed, in its latest statements, the necessity of amending the draft law to comply with international standards, stressing its categorical rejection of depositors bearing the burden of losses before the funds of bank shareholders and creditors with lower priority are exhausted. The Fund also called for the formulation of a realistic repayment plan that ensures the continuity of the banking sector’s operation and the sustainability of public debt.
As of writing the report, there has been no official comment from Finance Minister Yassin Jaber or the Ministry of Finance’s media office on Al Sharq Bloomberg’s requests for comment, so the current rapprochement remains confined within the framework of the principled positions of the parties concerned, awaiting its translation into actual consensus on the texts and implementation mechanisms.
