Representatives from the International Monetary Fund held discussions with officials in Lebanon this week on strengthening the country's bank restructuring strategy, the Washington-based lender said in a statement on Friday.
Lebanon has faced a historic fiscal crisis since 2019 caused by decades of corruption and mismanagement, and exacerbated by the 2024 war between Israel and Iran-backed Hezbollah.
The protracted fiscal crisis has left people and businesses unable to retrieve money stuck in Lebanon's banking sector.
Under Lebanon's proposed banking law, losses incurred during the country's financial crisis would be shared among the state, the Central Bank, commercial banks and depositors. Depositors, who lost access to their funds after the 2019 crisis, will be able to retrieve their money, up to $100,000, over four years.
Following a staff visit to Lebanon this week, IMF mission chief Ernesto Rameriz Rigo said the law was a first step towards rehabilitating the country's banking sector and ensuring depositors receive their funds. Mr Rigo said the strategy must be consistent with available liquidity to provide the resources needed and ensure that effort to restore Lebanon's public debt sustainability are not undermined.
Analysts have said the country's draft banking law does not do enough to ensure depositors receive their funds.
Discussions with Lebanese authorities also focused on amendments to the Bank Resolution Law to shore up an independent and transparent resolution process in line with international principles, Mr Rigo said.
“We hope that Parliament can discuss and approve these amendments in the coming months,” he said in a statement.
The bank resolution law is seen as a key step towards meeting IMF standards to secure a new economic programme.
Lebanon reached a staff-level agreement with the IMF in 2022 that would give the country access to roughly $3 billion in funding, but Beirut's government at the time failed to achieve the reforms required to unlock it.
The fund said a medium-term fiscal framework is also “critically needed” to support its bank restructuring strategy, expand social and capital spending and rebuild international capacity. The fund also urged Lebanon to approve a more modern and effecting income tax law to boost medium-term revenue.
