In appearance, Finance Minister Yassin Jaber sought to present his meeting with the Association of Banks in Lebanon (ABL) delegation at the Ministry of Finance as a broad, constructive session that projected an image of consensus. His public remarks reinforced this impression, suggesting that both sides—the ministry and the banks—were aligned on key points regarding the financial-gap law and the restructuring of the banking sector. In substance, however, the reality is entirely different.
The Ministry of Finance hosted a meeting between the finance minister and a delegation from the ABL headed by Salim Sfeir. The discussion focused on the draft law addressing the financial gap currently being prepared by the ministerial committee and the Central Bank (BDL), as well as on depositors’ funds and related matters, including bank restructuring, account audits, and other connected files.
After the meeting, Jaber said that the government’s work on the financial-gap law requires coordination with BDL and the ABL, noting what he described as progress with the association on the approaches under discussion. However, sources familiar with the meeting say this does not reflect reality. According to these sources, the meeting did not produce an agreement; rather, it confirmed a clear continuation of disagreements over how to address the issue and frame the financial-gap law.
It now appears that the government has returned to square one in defining the nature of the crisis. BDL Governor Karim Souhaid has argued in his legal assessments that the crisis is systemic, and the banks have echoed this view, stressing that the collapse affected the entire financial sector—not just a limited number of banks.
But in its latest proposal for the financial-gap law, the government has moved away from this classification in order to avoid assuming responsibility for the cost of the crisis and the debts arising from it. These debts are, in effect, BDL liabilities to the banks and therefore represent depositors’ funds.
Yet this shift comes despite the fact that Jaber himself stated at the recent Arab Banks Union conference in Beirut that the crisis is systemic. In his remarks, he said:
“Lebanon has faced several financial and banking crises throughout its history and has managed to overcome them and recover, which gives us reason for hope today. But the most recent crisis differed from previous ones in that it affected the entire banking system, with the BDL becoming part of the crisis. It also became a crisis of the financial system after the Lebanese government decided in April 2020 to cease payments on its Eurobond obligations.”
Still, it appears that the government and its finance minister have bowed to pressure from the IMF, which has been advancing a plan centered on “zeroing deposits” and wiping out bank capital on the grounds of preserving the state’s ability to borrow.
In a related development, the meeting at the Ministry of Finance also saw an extended debate over a new proposal being advanced under the label of a “new audit for banks.” The audit would be applied retroactively to 2017—two years before the crisis erupted—ostensibly to identify weaknesses and irregularities, but without any defined standards.
According to participants, the move aims to create another deposit category and to look for non-scientific and non-legal grounds to write off part of it. Under IMF pressure, the government is trying to shrink the financial gap at any cost, effectively erasing more deposits.
What is most notable here is the government’s and finance minister’s apparent disregard for the fact that BDL has already carried out the core task in this area. The central bank conducted a retroactive audit of bank accounts to determine which benefited from interest gains and financial-engineering schemes and classified those accounts using clear scientific and legal criteria. That work should form the foundation for any financial-gap law.
Another central point of contention is the exclusion of banks and depositors from discussions on drafting the financial-gap law. Although they are the most directly affected parties, they have not been genuinely involved in shaping the plan. This raises serious questions about the government’s decision to move forward with the IMF’s recommendations, which effectively point toward liquidating the banking sector and, in the process, undermining depositors.
A clear divergence has emerged between Finance Minister Yassin Jaber and the ABL over the draft financial-gap law, the recovery of deposits, and the proposed amendments to the bank-restructuring law. Meanwhile, Jaber continues to emphasize in every public appearance the need for coordination with the IMF. As he said yesterday:
“Without it, we will not be able to return as a country to international markets and to the international community, nor will anyone wishing to help Lebanon be able to do so, since there is always a fundamental condition, which is coordination with the Fund.”
But the question remains: At what cost—and at whose expense? The answer is clear: depositors and their money.
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