Salam announces long-awaited bill on 'financial hole'

Lebanese Prime Minister Nawaf Salam announced Friday evening a draft law on the "financial hole," demanded by the international community and aimed at distributing financial losses among the state, banks and savers ruined by the 2019 economic collapse.

This text is one of the international community's requirements, which has demanded for several years the adoption of crucial reforms before unlocking funds for Lebanon.

"We have finalized the draft law on regularizing the financial situation and returning deposits. Today, we are presenting the first comprehensive law to return deposits and address the financial gap. It also puts an end to collapse and chaos," Salam said in a statement to the Lebanese people broadcast on television channels.

"The draft law we are moving forward today is not a dream or a mirage but the beginning of a project that ... brings economic stability," he added, assuring that this project "helps restore confidence and complies with the requirements of the International Monetary Fund [IMF]" and "serves as a roadmap to get out of the crisis" that broke out in 2019.

Salam announced the decision at a conference at the Grand Serail, in the presence of Finance Minister Yassin Jaber, Economy Minister Amer Bisat, and Central Bank Governor Karim Souhaid.

The proposal aims to distribute losses between the state, the Banque du Liban (BDL), commercial banks and savers, whose number was estimated at nearly one million before the unprecedented 2019 economic collapse.

The IMF, which closely followed the drafting of the text, had insisted on the need to "restore the viability of the banking sector and protect depositors as much as possible."

Shortly before his speech, the prime minister's office published the draft law.

A note addressed to ministers and signed by the secretary general of the Parliament, Mahmoud Makkieh, stated that the government will meet on Monday at 2 p.m. at the presidential palace to discuss the text.

Discussions may resume at 10 a.m., if necessary, on Tuesday at the Grand Serail.

The Association of Banks in Lebanon (ABL) had criticized the draft on Monday, saying it had "serious shortcomings" and placed an undue burden on commercial banks.

According to government estimates, losses from the financial crisis reached about $70 billion, a figure likely to have increased over the six years since the crisis began.

Since taking office nearly a year ago, President Joseph Aoun and the prime minister have committed to implementing these reforms and passing the necessary legislation.

Parliament passed a law reforming banking secrecy in April. The previous law was blamed for allowing capital flight when the crisis erupted, while ordinary depositors were deprived of their savings.

After government approval, the new bill on financial losses could face roadblocks in Parliament. In recent years, politicians and lawmakers have repeatedly obstructed reforms demanded by the international community.