Banking Association's response to financial recovery strategy and legal action

Report by Yazbek Wehbe, English adaptation by Nadine Sassine

 

In the decision issued by the Cabinet titled "Financial Recovery Strategy" in May 2022, there is a provision discussing the cancellation of a significant portion of the obligations of the Central Bank of Lebanon in foreign currencies towards the banks.

This simply means that the banks no longer have funds with the central bank and therefore will not be able to return the funds to their depositors.

At that time, the Association of Banks considered this proposal as a disguised method to write off deposits. They challenged the provision before the State Council, which issued a ruling that invalidated it, making the decision binding on the executive authority.

The state's plan for recovery is not adequate, and the association is willing to sit with the government to iron out the flaws in it, but first and foremost, the state must be transparent with the people. The banks do not shirk any role or responsibility, and they understand the anger of the depositors.

The association is preparing to file again before the State Council to compel the state to repay its debt to the Central Bank of Lebanon. In the view of the association, this lawsuit is in the interest of the Central Bank of Lebanon and the depositors alike.