Depositor rights issue keeps Lebanons IMF deal on hold

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The complex issue of depositors' rights in Lebanese banks is at the forefront of challenges hindering the final agreement with the International Monetary Fund (IMF).

Amid significant discrepancies, bordering on contradictions, in the stances of involved parties, both domestically and internationally, this issue has become the most formidable obstacle in light of the conditions introduced by the IMF team in the initial agreement, according to financial and ministerial sources.

This article was originally published in, translated from the Lebanese newspaper Asharq al-Awsat.

As a telling sign of the lack of progress following the signing of the initial agreement last spring, Lebanon's suspended deal with the IMF will not feature on the agenda of this year's annual meetings of the World Bank and the IMF. These meetings are scheduled from October 9 to October 15 in Marrakech, Morocco. Earlier indications had leaned toward Lebanon's file being discussed during the autumn 2022 meetings.

According to an involved official in the Lebanese financial sector, it is now doubtful that the file will be brought up in any future joint or standalone meetings of the Board of Governors and its management. The Lebanese side has to fulfill its executive and legislative commitments to forge the final agreement bolstered by a financing program. These commitments are outlined in the initial agreement reached last spring by the working teams of Lebanon and the IMF.

In summary, a financial official speaking to "Al-Sharq Al-Awsat" suggests there is little chance of a significant shift in parliamentary stances regarding the depositors' issue, encompassing the rights of over two million accounts in the banking system.

Additionally, government authorities supporting the IMF's proposals, prioritizing approval of the Cabinet's strategy for bank restructuring to address the significant losses incurred by the sector while safeguarding small depositors and minimizing the use of public resources, appear to be losing enthusiasm.