Lebanon's Central Bank building in Beirut, Lebanon, September 3, 2024. (REUTERS/Mohamed Azakir)
On June 17, Lebanon’s new central bank governor, Karim Souhaid, announced higher monthly cash withdrawal limits. This might sound like good news for depositors eager to recover more of their trapped dollars.
But is it really a sign that Lebanon is finally getting its financial act together? Not really.
To make sense of it, we break down: what these new cash limits mean, how they fit into (or distract from) Lebanon’s long-overdue financial reforms and why the IMF still isn’t convinced we’re serious about fixing our economy.
1. What’s behind the increase in dollar cash withdrawals? And what are Circulars 158 and 166?
So, Lebanon’s new central bank governor, Karim Souhaid, announced the increased monthly cash withdrawal limits by introducing two key measures:
· Circular 158 will now allow withdrawals of up to $800/month (previously $400)
· Circular 166 will allow withdrawals of $400/month (previously lower, with stricter eligibility)
Both circulars No. 158 and 166 (the latter issued in February 2024) are part of BDL’s post-2019 crisis measures, aimed at partially compensating for the restrictions banks imposed on "lollar" (bank dollars) accounts opened before the end of 2019.
The circulars, extended to summer 2026, are part of BDL’s emergency framework to manage frozen dollar deposits that have been stuck since Lebanon’s 2019 financial meltdown.
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But here's the catch: It’s more like putting a new band-aid on an old wound. The core banking system hasn’t been restructured, and no new law has addressed the financial gap, which was estimated at $70 billion in 2020 (though this figure may have slightly decreased due to improved gold reserves).
Even worse? This patchwork approach costs Lebanon roughly $2.5 billion a year, most of which is covered by BDL. To fund it, BDL keeps tightening the money supply, draining public sector revenues (by hoarding dollars and giving back Lebanese lira) and maintaining austerity-like restrictions, while depositors get just a trickle of their own money.
The new limits might slightly ease up financial tension for many depositors. Yet, the question remains: Could they be a political stunt to buy time before the 2026 parliamentary elections?
2. So where does Lebanon’s monetary system stand now, after the war and the cease-fire?
Post-cease-fire between Israel and Lebanon, agreed upon in Nov. 2024, Lebanon’s economy remains fragile:
- Monetary stability is still being held together by short-term controls and liquidity restrictions.
- Public spending is severely limited. The state budget in 2025 is just $4.7 billion, less than 25 percent of its pre-crisis level, leaving little fiscal space for essential services or reconstruction and recovery efforts estimated at $11 billion.
- The BDL continues to freeze public sector revenues to avoid inflation, meaning essential services remain underfunded.
- The system is still relying on remittances and tourism inflows, which are now threatened by regional conflict and uncertainty.
In short: Lebanon is still improvising. There is no long-term monetary policy, no trust in banks, and no clear recovery plan. The circulars may provide short-term relief, but without restructuring and transparency, the system remains deeply unstable.
3. What reforms is the IMF asking for, and why is BDL (and the government) stalling?
According to the IMF's June 2025 visit and statement, Lebanon needs three major reforms to unlock any real deal:
- Tax and customs overhaul
- The IMF wants a shift from indirect taxes (like VAT) to more equitable, direct taxation (tax paid directly by individuals or entities on income, profits or wealth, unlike indirect taxes like VAT, which are built into prices.)
- They want to stop giving tax breaks on money earned from selling investments or from stock dividends.
- They also want to overhaul the opaque "lump-sum" tax system for professionals (like doctors, lawyers, or consultants, who currently pay a flat tax based on rough estimates instead of their real income)
- Spending rationalization and fiscal planning
- Lebanon needs a long-term plan to manage government spending and debt.
- It also needs a solid plan to restructure its unpaid Eurobonds and lower its public debt.
- Banking sector restructuring
- This includes auditing and recognizing losses at commercial banks and the BDL.
- A law to resolve the financial gap (including how to treat "non-eligible" deposits, such as transfers after Oct. 2019, check-swapping schemes, or accounts with large Sayrafa gains) is urgently needed.
So what’s the holdup?
- Finance Minister Yassine Jaber is firmly against new taxes, especially before 2026, the year the parliamentary elections are set to take place.
- BDL, under Souhaid, is signaling it prefers to delay reforms and keep using circulars as a short-term cushion.
- Political leaders don’t want to upset powerful lobbies (banking, real estate, professionals) ahead of the next elections.
In essence, the IMF is ringing alarm bells, but Beirut is hitting snooze, again.
4. What’s the economic outlook for 2025?
Despite the dysfunction, there’s a glimmer of cautious optimism. The World Bank expects Lebanon’s GDP to grow by 4.7 percent in 2025. This is helped by a modest rebound in tourism, consumer spending and a favorable base effect following a sharper-than-expected 7.1 percent GDP decrease in 2024.
Inflation, meanwhile, is expected to ease to 15.2 percent, down from over 45 percent in 2024, helped by exchange rate stability and a dollarized economy.
But there’s a big “if.” These positive projections depend on stability and reform. If political paralysis drags on or conflict reignites, growth will suffer.
The World Bank also warns that Lebanon’s banking sector is still crippled, and meaningful recovery will require bank recapitalization, public investment and structural reform.
Bottom line? You can withdraw more dollars now. But that doesn’t mean the banking crisis is being fixed. It means the system is kicking the can down the road, hoping that crisis fatigue (and elections) will delay the inevitable.In other words: don’t mistake noise for change.
