Lebanon deposit crisis: IMF and BDL find common ground

3^min

Report by Lea Fayad, English adaptation by Yasmine Jaroudi

The Banque du Liban (BDL) and the International Monetary Fund (IMF) have reached an understanding on three main points to advance a long-stalled plan to repay bank deposits and address the country's financial crisis.

According to officials familiar with the talks, the discussions focused on resolving outstanding debts between the Lebanese state and BDL, setting realistic conditions for any deposit repayment plan, and agreeing on the hierarchy of responsibilities for covering losses—a point that has long been one of the most contentious issues in negotiations.

Regarding state obligations, the IMF acknowledged that the Lebanese government owes large sums to the BDL.

However, BDL indicated it would not seek full repayment to avoid imposing additional burdens on the state, the sources said.

Instead, the two sides agreed on a framework in which the government would repay a limited and "reasonable" portion of the outstanding debts, allowing BDL to continue carrying out its role and contribute to repaying part of the depositors' funds.

Regarding the deposit repayment plan itself, the IMF stressed that any proposal must be realistic and implementable, require sufficient liquidity within the banking sector, include safeguards to preserve that liquidity, and include a clear timeline for execution.

The sources said both sides agreed that repayment commitments must be aligned with Lebanon's financial capabilities and broader economic stability to ensure the plan is sustainable and does not collapse after launch.

The talks also addressed the hierarchy of claims and responsibility for losses, an issue that has repeatedly stalled negotiations between Lebanon and the IMF.

BDL presented a data-driven study prepared with its financial adviser, outlining an approach designed to revive a significant part of the banking sector, protect its core functions, and support economic recovery.

In addition, BDL argued that dismantling the banking sector entirely would not only obstruct deposit repayment but would also undermine prospects for stability and growth.