October 15, 2026
Nearly seven years after the financial collapse that froze the deposits of the Lebanese and destroyed confidence in the banking sector, the financial gap law returns to the forefront of negotiations with the International Monetary Fund, amid government announcements of progress in understandings and limiting the discussion to three basic issues. However, the most sensitive questions remain about who will bear the losses from the collapse, when depositors will recover their money, and the actual value of those funds.
The recent statements of the Minister of Economy and Trade, Amer Al-Bassat, from the Thai capital, Bangkok, where the meetings of the International Monetary Fund and the World Bank are being held, revealed that the negotiations are currently focusing on the mechanisms for implementing the gap law and distributing the burdens resulting from it, bypassing the stage of discussion on general principles.
Al-Bassat confirmed that there is a general consensus between the Lebanese government, the IMF, and the Bank of Lebanon to limit discussions to three main issues, including: the distribution of banking sector losses, the mechanisms for returning deposits and scheduling their repayment, and the size of the state’s contribution to the restructuring process. Despite the technical nature of these points, each one of them has direct repercussions on the rights of depositors and the future of banks and public finance, and determines the party that will bear the greatest burden of the crisis.
The first node is the distribution of the accumulated losses since late 2019 between the state, the Bank of Lebanon, commercial banks and their shareholders. In this context, the International Monetary Fund insists on respecting the legal sequence of charging losses, so that depositors do not bear any losses before shareholders and lower-ranking claimants, a principle that raises questions about the size of the actual losses in each bank and the ability of shareholders to reconstitute capital.
The second knot, which is most closely linked to the lives of citizens, is related to deposit return mechanisms. The proposed government formulas include paying deposits not exceeding $100,000 in cash over a period of four years, while larger amounts are processed through long-term arrangements that include securities linked to the assets of the Bank of Lebanon. With Al-Bassat estimating total deposits at about $80 billion, and economic reports estimating losses in the financial system at about $70 billion, the challenge remains limited to the availability of actual liquidity and the ability of the banking sector to fulfill its obligations without creating new crises.
The third knot is embodied in the size of the Lebanese state’s contribution to the restructuring process and determining its time frames and benefits. This point acquires exceptional sensitivity in light of the increasing financial burdens on the treasury as a result of the needs of reconstruction and social spending, as the IMF stressed, in a statement issued on September 18, the necessity of the deposit return plan being compatible with the sustainability of public debt and the banks’ ability to continue.
In addition to these complications, the President of the Republic, Joseph Aoun, appealed against Article 3 of the Banking Reform and Reorganization Law, adding a constitutional dimension to the file, after referring the powers and independence of the Bank of Lebanon to the Constitutional Council. IMF spokeswoman Julie Kozak explained on October 1 that the institution would evaluate any amendments resulting from the constitutional review to ensure their compatibility with international standards, keeping the legislative framework linked to an independent judicial process.
The Lebanese delegation, headed by Finance Minister Yassine Jaber, and with the participation of the Minister of Economy, Governor of the Bank of Lebanon, Karim Said, and financial officials, continues its meetings in Bangkok to advance negotiations towards a new financial program. Despite the announced rapprochement, the IMF has not announced its final approval of the gap law, which keeps the rights of depositors suspended awaiting final legal texts that precisely define the sources of financing and the responsibilities of the parties concerned.
