Ali Zein al-Din wrote in Asharq al-Awsat:
The proposals amending the provisions of the banking reform law in Lebanon have reached the final drafting station at the Parliamentary Finance and Budget Committee, in preparation for their complete approval in the middle of next week, and their referral to the General Assembly of the Council, amid prior and broad parliamentary consensus participating in the committee, which guarantees the approval of the legislation in the event that the date of the session is set, which is expected before the end of this month. While the enforcement of the law remains linked to the approval of the Financial Regulation and Deposit Recovery Law, which constitutes the focus of the dispute over the “financial gap.”
The immediate impact of this “achievement,” according to a concerned official and participant, is limited to the repeated response to the conditions of the International Fund, with a relative margin of adaptation to the concept of legislative sovereignty and the powers of local authorities, especially in terms of taking into account the texts of the laws in force, which stipulate the independence of the Central Bank, the powers of the Governor and the Central Council, and their pivotal and exclusive tasks in managing monetary policy and the financial sector.
In summary, a lengthy discussion took place regarding the Central Bank’s request to include the phrase “taking into account the provisions of Article 70 of the Money and Credit Law” into Article 3 of the Banking Reform Law, so that the government expressed through the Minister of Finance, Yassin Jaber, that “it has no objection to the amendment.” Therefore, it was agreed to amend Articles 3 and 13, in a manner consistent with removing ambiguity in the text regarding the independence of the Central Bank and the role of the Central Council in it.
However, there is a need for the approval and agreement of the IMF. With the prior suspension of the entry into force of the law by approving and publishing the Financial Regulatory and Deposit Recovery Law, the tripartite legislative journey, which also includes the Banking Secrecy Amendments Law, remains hostage to the most difficult consensus on the pending project, which has been called the “Gap Law,” due to the clear and sharp divergence in approaches to concepts and basics, starting with determining the size of losses, and ending with distributing burdens according to responsibilities, in preparation for adopting appropriate mechanisms to restore “as much as possible” of the rights of depositors whose hopes are fading. In turn, after a long and painful wait, he is approaching the end of his seventh year.
Thus, the financial and monetary landscape continues, in a state of “uncertainty”, full of ambiguities that border on ongoing dilemmas, in a “reproduced” deficit by adopting a unified and integrated local approach, aimed at rescue and recovery. According to the financial official, “delivering” to all the demands of the International Monetary Fund, which the government team is leaning towards, will inevitably lead to the “failure” of most of the operating banks, and consequently the ignorance of the fate of the rights holders’ restrictions, while no one guarantees that adhering to the conditions of “sustainability of public debt” to obtain the promised financing will return the country to the international credit markets without an active banking system, and powers deducted from the governance of the Central Bank.
Pending the government’s return with its renewed amendments, after it restored the basic project previously referred to the Parliament, concerns are rising, according to the same official, regarding the oscillation in the vicious circle of debates between the IMF’s strict requirement to limit “the use of public funds” in reforming the conditions of the banks, and the reality of the state’s attempt to withdraw overdrawn financing from the Central Bank, with a total of no less than $60 billion. While these amounts are essentially classified, with a total of approximately $80 billion; Deposits and investment certificates of commercial banks, and by extension “depositors’ money”.
Despite the ambiguity in descriptions adopted by the government, the Governor of the Central Bank, Karim Saeed, declares that the financial and banking crisis in Lebanon is a “systemic crisis” in every sense of the word, from a technical standpoint.
It has been described in this way by many experts locally and internationally, and was recently recognized by the International Monetary Fund. By inference, the issue “is not related to the failure of a single bank, or even a number of banks; rather, it is a simultaneous collapse of the state’s financial capacity, the financial position of the central bank, the liquidity of the banking sector, and the confidence of citizens, so that all these elements have become feeding each other, leading to a comprehensive collapse.”
Likewise, the Association of Banks did not hesitate to convey its concerns to senior state officials, despite the insistence on practically excluding it from government discussions, and in its latest developments, what the President of the Republic heard from the Board of Directors headed by Salim Sfeir, that “the current proposal to address the financial crisis seems unfair to the banking sector, and that its application in its current form is not practically implementable,” indicating the banking system’s aspiration for effective partnership in the path of the required reforms, and its commitment to playing its role in supporting the recovery process and contributing to rebuilding confidence. In the Lebanese economy.
In turn, the head of the Parliamentary Finance Committee, Ibrahim Kanaan, confirmed that the previously referred draft “gap” law is subject to reconsideration of some of its articles by the government, “and what we want is a law to recover deposits, not to write them off. From this standpoint, the government is reconsidering some provisions to secure the desired result assumed by the goal of the law; trust is not only obtained from the IMF externally, but internal trust is also important through the Lebanese depositor and investor, who will not put a penny in Lebanon if he does not feel “It is guaranteed.”
