Most depositors protected in economic rescue plan, says Lebanon's Diab

‘All proposed solutions’ on table as Diab government finalises plan to escape financial crisis

People in Lebanon have been hit by rising prices, soaring unemployment, and capital controls that have cut access to their savings amid an unprecedented economic crisis. Bloomberg

Lebanese Prime Minister Hassan Diab on Thursday said that 98 per cent of depositors will be left unscathed by an economic rescue plan that has been criticised because it proposes to use deposits to cover huge losses.

A draft plan that emerged last week provided the most detailed blueprint yet on how Lebanon would try to pull itself from a financial crisis that sank its currency and led to a sovereign default.

Among the difficult measures in the draft was a proposal for "a transitory, exceptional contribution from large depositors" to help plug losses in the banking sector, estimated at $83.2 billion (Dh305.6).

In a televised address on Thursday, Mr Diab sought to reassure Lebanese already hit by rising prices, soaring unemployment, and capital controls that have cut access to their savings, pledging that most of their deposits were safe.

"After in-depth studies and based on figures from the end of February 2020, I can announce today that no less than 98 per cent of depositors will be unaffected," Mr Diab said.

He said "all proposed solutions" were on the table as the rescue plan was finalised to "relieve people who are bearing today the price for the wrong decisions, indebtedness and financial engineering of the past".

Mr Diab said depositors' money "evaporated" in the months before his new government was formed on January 21.

"No one will lose their deposits but when they will get them depends on the restructuring plan," he said after a Cabinet meeting.