Lebanese Finance Minister: Hope for preliminary agreement with IMF to address banking crisis

Beirut -- Lebanese Finance Minister Yassin Jaber expressed hope on Tuesday that an initial agreement with the International Monetary Fund (IMF) would be reached this week, “putting the resolution of the banking crisis on an implementation track.” This statement followed the opening of the first session of negotiations with the IMF mission at the Lebanese Ministry of Finance headquarters. The mission, led by Chief of Mission Ernesto Ramirez Rigo, met with the Lebanese negotiating delegation headed by Finance Minister Yassin Jaber, which included Minister of Economy and Trade Amir Khatib, Central Bank of Lebanon Governor Riad Salame, representatives of the Presidency and the Council of Ministers, as well as relevant experts.

In a press statement, Jaber emphasized Lebanon’s urgent need to resolve its banking crisis and “restore a functional banking sector that provides financing and loans and contributes to stimulating the national economy,” noting that the country cannot continue to rely on a cash-based economy. He pointed to close coordination between the government and the Central Bank to present a unified position, both in negotiations with the IMF and in discussions regarding the draft law on the fiscal gap, which the government has referred to the Parliament. He noted that approving this law constitutes the entry point for beginning to address the banking crisis, as its failure to pass “is what currently prevents moving forward with a program with the Fund.”

Jaber clarified that “there is an agreement with the Fund on applying international principles and standards related to the hierarchy of loss-bearing, whereby the state and the Central Bank of Lebanon bear losses first, followed by the banking sector, with depositors bearing losses last.” He added that the state would bear losses within the limits of its capacity, while ensuring the sustainability of public debt and taking into account the file of Eurobond holders—Lebanese Treasury bonds denominated in foreign currencies—which also requires resolution. He further confirmed the understanding regarding the Central Bank’s responsibility in managing the file of addressing the banking crisis and the necessity of supporting it to enable success in this task.

Jaber outlined the practical steps depositors can expect to recover their funds, stating, “The path begins with the approval of the law, followed by the reform of the banking sector and the implementation of the agreed-upon program to repay depositors’ funds.” (End) A Y B / N A A