Salam announces 'not perfect' but 'realistic, fair' plan for return of deposits

This announcement, long-awaited, concerns one of the most important proposed laws: Lebanese Prime Minister Nawaf Salam announced on Friday that ongoing discussions on a bill to organize the allocation of losses and the restitution of bank deposits frozen since the start of the 2019 crisis have resulted in a plan that is "not perfect" but "realistic and fair."

The plan will be considered by the Cabinet on Monday at 2 p.m.

This bill is one of the requirements set by the international community, which has long demanded key reforms as a precondition to unlocking funds for Lebanon.

"The bill we are presenting today is neither a dream nor a miracle, but the beginning of a new process to end the erosion of deposits, protect social stability, stop the collapse and chaos that have exhausted every Lebanese and restore confidence in the financial system," Salam said in a televised address to the Lebanese people.

He made the announcement during a conference held at the Grand Serail in the presence of Finance Minister Yassin Jaber, Economy Minister Amer Bisat, and Central Bank Governor Karim Souhaid. The governor's presence was a strong symbol amid media reports of many disputes between the government team and Souhaid in recent months.

Stating that "this bill may not be perfect and will not meet all expectations," Salam said it represents "a realistic and fair step towards restoring rights, halting the collapse, rehabilitating the banking sector and reviving growth."

The head of government also praised a text that is "in line with the IMF's main requirements," while leaving the door open for discussions on the details.

The bill is intended to allocate losses among the state, Banque du Liban (BDL), commercial banks and depositors, whose number was estimated at nearly one million before the unprecedented 2019 economic collapse.

The IMF, which closely monitored the drafting of the bill, had emphasized the need to "restore the viability of the banking sector and protect depositors as much as possible."

Salam also indicated that the "plan is based on international standards for auditing, investigation, asset and liability hierarchy, oversight and recapitalization."

"The state also commits, as part of this plan, to fully play its role in recapitalizing the central bank, in accordance with Article 113 of the Monetary and Credit Law," he added.

'You are not alone'

"I know that many of you are listening today with hearts full of anger: anger toward a state that left you alone, toward a system that did not protect your savings, toward unkept promises and rhetoric far from the truth. I hear you clearly," Salam said.

"That is why we will not offer just a temporary band-aid for a crisis that has lasted for years. Addressing this crisis requires sincerity, clarity and the willingness to assume responsibilities. Today, we are starting a new phase based on transparency, whose goal is justice and whose tool is a fair and applicable law."

"This time, you are not alone," he said.

The bill was published on the prime minister's office X account one hour before the press conference began. The plan includes four categories of deposits.

Small deposits under $100,000 will be reimbursed at their actual value over four years, in monthly or quarterly installments, at the account holder's preference.

These reimbursements will be made to accounts free of restrictions, usable by check, wire transfer or credit card, within one month of the law's entry into force.

For the other three categories, the process is similar: the first $100,000 are returned in cash, while the remainder is paid back via financial certificates guaranteed by assets — category A for mid-size deposits ($100,000 to $1 million), category B for large deposits ($1 million to $5 million) and category C for very large deposits (over $5 million).

In terms of provisions, the bill notably requires the BDL to conduct an independent audit of its assets one month after the law's publication, requires banks to be audited by international firms and to recapitalize, if necessary, within five years and in compliance with Basel III capital requirements.

The text provides for subjecting noncompliant banks to decisions of the High Banking Authority, chaired by the BDL governor. It also defines several categories of irregular assets, with specific corrective measures including freezes and other remedies.