Negotiations and implications: Lebanese deposit crisis stalls IMF agreement talks

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14-09-2023 | 00:57
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Negotiations and implications: Lebanese deposit crisis stalls IMF agreement talks
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Negotiations and implications: Lebanese deposit crisis stalls IMF agreement talks

Sources closely following the matter have indicated that the meetings held between MPs and the mission from the International Monetary Fund (IMF) have encountered a significant obstacle that could undermine the agreement. That obstacle is the issue of deposits.

The sources clarified that the mission was evident in rejecting to establish a deposit recovery fund. They also rejected any expansion in using state assets to cover the losses of the banking sector and the wealthy depositors close to the system, regardless of their various affiliations.

This article is originally published in, translated from Lebanese newspaper Nidaa Al-Watan.
On the other hand, there is a broad parliamentary insistence on positions that the IMF mission does not find realistic.

Moreover, the informed sources emphasized that the IMF is okay with reimbursing all deposits to all depositors, provided that those involved can achieve it outside the agreement with the fund.

According to the IMF experts, this agreement only guarantees deposits up to $100,000, while the rest would be subject to 'haircuts' and transferring deposits into shares in banks, among other non-direct cash means.

The sources asserted that all scenarios considered by the fund have undeniably confirmed the impossibility of burdening the state with the majority of the losses. Any expansion in using state assets and revenues to repay deposits would undermine the principle of sustaining public debt.

In other words, Lebanon would enter a vortex of insurmountable financial difficulties that the fund cannot cover.


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