IMF says more is needed
before reaching agreement

Statement points to slow progress in talks

The International Monetary Fund (IMF) said the Bank Restructuring Law (BRL) remains a key sticking point in negotiations preceding a new staff-level agreement. The fund said at the end of its visit last week that it expects engagement to continue. Pointing to these sticky points, the IMF end-of-mission statement said: “There was progress in further clarifying the approaches under consideration by the Banque du Liban (BDL) and the Government.” Ernesto Ramirez Rigo, the IMF mission chief to Lebanon said: “Further work is needed to reach an agreement on a strategy for an effective and durable restructuring of Lebanon’s banking sector, leading to a sound and resilient system."

Sticky points
The IMF said that the Bank Resolution Law (BRL) should be applied in all cases. It described the law as essential to support a transparent and predictable bank resolution and liquidation process. The fund also cited the Financial Stabilization and Deposits Recovery Law (Gap Law). It called both laws essential to restore financial stability and maximize deposit recovery once they are adopted. The draft Gap Law is currently before Parliament, and the IMF has been working with the authorities to align it with international standards.

Not yet close to the finish line
The fund said more talks are needed to set criteria that maximize deposit repayments. These criteria must stay consistent with the liquidity positions of BDL and the banking sector. They must also respect public debt sustainability and the restoration of BDL’s solvency. The IMF said that it remains critical for the Gap Law to uphold the hierarchy of claims in the allocation of losses. This would maximize protection for depositors.

Ramirez Rigo said that the IMF remains committed to supporting Lebanon in its efforts to design and implement a comprehensive economic reform program, in line with the IMF’s policies and mandate.

In a TV interview on Sunday night, the minister of Finance Yassine Jaber outlined the key points discussed with the IMF as follows:

* Agreement on Core Principles: High-level talks with the IMF yielded agreement on core principles, including loss hierarchy, addressing excessive interest/illicit funds, and state contributions to BDL to cover losses.

* Subcommittee Formation: A technical subcommittee of experts has been formed to hash out implementation details (liquidity, timing, and harmonization with existing laws) with a target timeline of finishing before the end of the year.

* Depositor Protection & Recovery: Approximately 90 percent of depositors (those with accounts under $100,000) will have their accounts prioritized. While full deposits are recognized, recovery will happen over time via bonds and structured payouts rather than immediate lump-sum cash, owing to depleted central bank reserves.

* Bank Restructuring & Capital: Banks must absorb losses through their capital, wipe out anomalous high-interest yields and LL1,500 exchange rate distortions, and recapitalize to ensure the sector's survival, which the economy urgently requires to avoid permanent cash-economy isolation.