IMF awaits action: Lebanon urged to pass banking, fiscal reform bills

Report by Bassam Abou Zeid, English adaptation by Mariella Succar

A large delegation from the International Monetary Fund is expected to arrive in Lebanon later this month to begin discussions on the country’s stalled financial reforms.

On one front, Parliament is reviewing a draft law on banking sector restructuring. 

On the other hand, the government is working on a financial gap law to identify losses and assign responsibility.

Observers following the talks say Lebanon must pass both laws by July at the latest, as the IMF’s fall meetings are scheduled for October. The official Lebanese delegation is expected to present these two laws during the sessions.

According to information obtained by LBCI, the Central Bank, under the guidance of Governor Karim Souaid, has begun drafting the financial gap law. 

Recent amendments to Lebanon’s banking secrecy law have granted the Central Bank access to bank accounts and the holdings of major depositors, enabling it to obtain key financial data. 

These steps are essential to defining the scope of restructuring, calculating the financial gap, assigning responsibility, and determining how to recover deposits.

The Finance and Budget Committee, headed by MP Ibrahim Kanaan, is set to accelerate discussions on the restructuring law in preparation for joint committee review and a general vote. The draft will serve as a basis for gathering feedback from all relevant stakeholders—including the banks.

Sources indicated that neither local nor international backers of the reform will accept legislation that goes against their interests. This also applies to the financial gap law. Lebanon can no longer afford delays in passing these two bills, which are seen as prerequisites for reviving the banking sector.

If approved, the laws could help the sector attract investment, draw cash currently held outside the banking system, and curb the cash economy.

However, banking sources said that lenders have yet to be consulted on the financial gap legislation. Questions remain about whether the restructuring and financial gap laws will be merged or kept as separate pieces of legislation.