(Illustration: L'Orient Today)
Last week, a team from the International Monetary Fund (IMF) came to Beirut. Their verdict? Lebanon’s 2026 draft budget and banking reforms are not ambitious enough. Translation: no deal.
And without a deal, the IMF staff-level agreement (SLA) stays out of reach. No SLA means no IMF program, which means no unlocking a new round of funds.
So what exactly is this SLA, and why is Lebanon still missing the mark?
Let’s break it down.
1. What’s a preliminary staff-level agreement?
Back in April 2022, Lebanon shook hands with the IMF on what’s called a staff-level agreement. By now, however, that deal is no longer valid. A new agreement is expected to be reached in the first quarter of 2026.
Think of a staff-level agreement as a draft contract: the IMF staff say, “Here’s the money, but only if you fix your house first.” It isn’t real until the IMF board signs off — and they won’t do that unless Lebanon succeeds in checking off a list of reforms.
And so the Lebanese government, Parliament, Finance Ministry and the central bank, i.e., Banque du Liban (BDL), were handed a list of required reforms and the directive to implement them should Lebanon wish to unlock the board’s approval.
In a nutshell, what’s on that list?
- Admitting the real size of the losses (tens of billions vanished before and after 2019). These losses should fall on the right shoulders, meaning, BDL, the state and big depositors. Small depositors should ostensibly be “protected.” (and by small depositors, we mean people who have funds or savings up to $100,000).
- Restructuring the banking sector and injecting capital into the sector.
- Enforcing a proper Bank Resolution Law with real authority and no political interference.
- Writing a budget that’s more than short-term patchwork. In other words, the IMF wants the government to pass a medium or long-term plan so the debt does not spiral out of control (and so the IMF has reassurances that it will eventually get its money back).
- Expanding the tax base and actually collecting taxes fairly.
- Lebanon has also been in default on its eurobonds since 2020. What was $31 billion then has ballooned to more than $45 billion today. The IMF wants those obligations shown clearly in the budget, even if payments are on hold, to make sure the extent of the money owed is not masked.
- The IMF also requested reforms in the public sector, including the electricity sector, among others. In other words, better governance in state institutions, which could lead to actual accountability.
2. So… has Lebanon actually met any of these requirements?
Some, yes, but not nearly enough.
Parliament passed a Bank Resolution Law in July 2025 (as per one of the above-mentioned requirements), but the IMF says it’s not up to international standards. The law was watered down with amendments that let banks appeal too easily and weaken the new authority meant to restructure them. Now, the IMF is requesting new amendments to the law.
Translation: still no credible plan to decide who pays for the gap in the banks' books.
The government approved a 2026 draft budget last week. The IMF welcomed the attempt to widen the tax base and improve compliance, but said it still doesn’t go far enough.
Why? Because the budget dropped a fuel excise tax after just one month, a move that left a hole in revenues (basically, it put a tax on fuel to raise money, then quickly canceled it, meaning less money coming into the state’s pocket).
Worse, the budget still looks like an “election budget,” with no medium-term fiscal framework. It only covers short-term spending to look good before elections, but has no serious plan for the next few years.
Lebanon did, however, manage to score one win.
In April 2025, Parliament passed a new banking secrecy law — a key IMF demand to allow auditors and regulators to trace shady financial flows. It’s progress, but the IMF also flagged spending transparency: not all expenditures, especially those funded by outside loans, are properly recorded.
The IMF’s verdict after last week’s visit was polite but firm: Lebanon has taken a few steps, but too slowly, and often even in the wrong direction. It is not enough.
3. What now?
For now, Lebanon is still stuck in limbo. The IMF has been crystal clear: without bold reforms, there’s no deal and no money.
The IMF and World Bank meetings in October are supposed to be Lebanon’s chance to clinch a new staff-level agreement — a moment to show the world that it’s serious. But that window is closing, and Parliament and the government will need to move fast.
What needs to happen?
- Fix the banking law so it actually works and protects small depositors.
- Pass a fair loss-allocation law to finally decide who covers the banking gap— with big shareholders and investors taking the hit before depositors.
- Approve a serious budget that raises revenues in a fair way and sets out a real plan for the next three to five years.
- Show transparency so that every lira spent, including foreign aid, is accounted for.
If these steps don’t happen, Lebanon risks going into yet another election season with no IMF program, no external financing, and no clear future for depositors still locked out of their savings.
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