Lebanon will commit to repaying all bank depositors over time as part of its financial reform strategy, Economy Minister Amer Bisat told Bloomberg. The plan, which will distribute the financial burden across the government, Banque du Liban, and commercial banks, is aimed at ending a prolonged deadlock over economic reforms.
The government’s commitment to protecting deposits is part of a broader push to secure financial support from the International Monetary Fund. Lebanon has been in negotiations with the IMF since 2020, following a sovereign default on $30 billion in international bonds and the onset of a deep financial crisis that erased most of the value of the local currency and triggered hyperinflation.
Bisat, a former executive at BlackRock, said repayment will likely involve financial instruments and time delays but stressed that depositors would not incur permanent losses. He added that the reform plan must preserve the banking sector and the central bank’s ability to conduct monetary policy, requiring a balanced allocation of losses.
“There’s a limit to how much we can impose on each of them,” he said, referring to the state, banks, and Banque du Liban.
The central bank is estimated to have used billions in depositor funds from 2016 onward to finance government deficits and maintain the exchange rate peg. The resulting financial hole is estimated at around $70 billion—more than three times the country’s GDP.
As part of the recovery effort, a law to lift banking secrecy was approved by the cabinet last week and is expected to pass in parliament in the coming weeks. The legislation will allow authorities to assess the capital status of individual banks and prepare for potential consolidation.
The government is also planning to host an investor conference in September to promote Lebanon’s return to financial markets. However, Bisat warned that external risks—including geopolitical tensions and declining remittances from Lebanon’s large diaspora—could complicate the recovery effort. He noted that maintaining stability on the southern border, particularly between Hezbollah and Israel, remains a priority.
Lebanon’s efforts come as the IMF has called for a comprehensive approach to debt restructuring, currency unification, and banking sector reform. So far, political divisions and pushback from domestic banks have delayed the implementation of the required measures.
