Banks in debt: Negotiations between International Financial Institutions and Lebanese banks

International financial institutions, including the International Finance Corporation (IFC) affiliated with the World Bank, have lent hundreds of millions of dollars to Lebanese banks to lend to Lebanese citizens in various fields, such as the environment, clean energy, women's empowerment, small industries, and others. These loans are expected to be paid back like any other loan in Lebanon.

However, with the start of the financial collapse, borrowers of these funds from Lebanese banks rushed to repay them to the concerned banks at a rate of LBP 1,500 per dollar using bank checks.

At the same time, international financial institutions took action to recover their funds, including the IFC, whose outstanding loans amounted to $300 million.

Moreover, they discussed the issue with the central bank, which told them they had to resolve it with the concerned banks.

The IFC wanted to recover its funds outside of Lebanon by transferring them from banks to its account. 

Still, the concerned banks refused, arguing that they could not repay funds to international financial institutions. At the same time, they could not repay the deposits of Lebanese depositors due to the lack of liquidity.

Therefore, the IFC and other international institutions negotiated with the concerned banks to discuss how to repay these debts.

Proposals ranged from rescheduling, discounting amounts of these debts, or replacing them with Eurobonds in possession of the concerned banks. Also, it is known that some banks, which only owed minimal amounts, have already repaid them.