A tag was made on the façade of a bank agency in Burj Hammoud during a depositor's protest on Aug. 29. (Credit: Philippe Hage Boutros)
Caretaker Minister of Displaced, Issam Charafeddine, held a meeting with representatives from several Lebanese depositor rights advocacy associations in Beirut to support their demands and present his solutions for returning deposits. Starting in late 2019, a majority of Lebanese bank clients were denied access to their dollar funds due to the banks' solvency crisis combined with the state's inaction.
The minister hopes to convince the government to include this issue on the agenda, as evidenced by a written request he submitted, dated Nov. 8.
During his press conference after the meeting, Charafeddine emphasized that his ministry had "presented a plan as early as May 2022" to compensate the country's financial losses without affecting the deposits, but "unfortunately, this plan was not implemented and was not taken seriously by influential people within the government." He also called on the Central Bank to make permanent the increased withdrawal limits authorized through its circulars No. 158 and No. 166, which adjust restrictions imposed by banks on deposits made before the crisis began, among other demands.
The associations Depositors Outcry, Depositors Federation, and the Military Group for Deposit Recovery were among the organizations present. However, the Depositors' Union, co-founded by lawyer Fouad Debs, did not participate in the meeting.
Social urgency
The minister emphasized the social urgency, in a Lebanese context marked by five years of crisis and more than a year of war between Hezbollah and Israel — until a cease-fire took effect last Nov. 27 — to justify the necessity of quick action.
"Gold is piled up by tons at BDL while depositors are starving. With the intensifying crisis of poverty, destitution, hunger, and cold for the majority of depositors and the Lebanese people, we are meeting today to present radical solutions and respond to depositors' urgent demands," he stated.
Debs expressed his reservations.
"The ministry has been preparing a plan for more than a year that advocates using state assets to fund the repayment of deposits confiscated by banks at the start of the banking crisis that erupted at the end of 2019. We do not support this approach of using public assets to repay private debts," he explained. This method, according to him, corresponds to the one favored by banks and major depositors in recent years, a stance that has contributed to blocking any attempt to restructure the banking sector and clear the country’s accumulated $70 billion in losses.
The International Monetary Fund (IMF) has rejected any solution that does not respect the "hierarchy of responsibilities" concerning Lebanese banks’ financial losses. This means, for the international organization, that the banks' equity should first absorb the losses, followed by the funds of secondary or subordinated creditors (such as subordinated debt holders), and finally, as a last resort, senior creditors (such as depositors).
Lebanon holds the second-largest gold reserves in the region after Saudi Arabia, with 286 tons, equivalent to 9.22 million troy ounces (one ounce is equal to 31.1 grams), as well as foreign exchange reserves estimated at around $10 billion. However, the use of these gold reserves is strictly regulated by law, given their strategic importance to the country. Some voices, though isolated, nonetheless view the sale of gold as inevitable, considering the financial abyss Lebanon must fill to clean up its liabilities, even if some funds embezzled by political and banking officials in recent decades were recovered.