IMF met with cabinet last week to discuss capital control law

BEIRUT — The Lebanese cabinet last week discussed capital control and banking secrecy laws with the International Monetary Fund, according to a statement released today. The parliamentary Finance and Budget Committee will review on Wednesday the budget of the Energy Ministry, the last ministerial budget needing review before the committee can move on to discussing tax amendments.

Here’s what we know:

    • A statement released by the office of the Deputy Prime Minister Saade Chami revealed that the government had met with the IMF last week, after members of Parliament asked it to reach an agreement with the fund on a capital control mechanism before a draft law on the matter is sent to the general assembly for voting.

    • The talks also revolved around the requirement to amend the banking secrecy law so it can better deal with corruption and tax evasion. The issues of banking sector losses, the distribution of those losses and the protection of small depositors were also discussed.

    • One of the main objectives of the recent two-day bank strike was to force the government to impose official capital controls. The passing of such a law would shield banks from further lawsuits.

    • Ibrahim Kanaan, head of the Finance and Budget Committee, has repeatedly reiterated that the draft capital control law is ready for voting but for minor amendments.

    • Kanaan also announced today that the Finance and Budget Committee has approved the budget of the Finance Ministry, except for one article related to the payment of LL4.77 trillion to banks as interest on their Lebanese treasury bonds holdings.

    • On Feb. 10, President Michel Aoun, asked for the LL6.4 trillion originally allocated in the budget proposal for the payment of interest on Lebanese treasury bonds, to go to the financing of Electricité du Liban and an increase for the public sector pensions.

    • The budget of the Energy Ministry will be the last to be discussed on Wednesday before the committee starts reviewing the proposed tax amendments,” Kanaan said.