Lebanon’s cabinet approves draft law on financial crisis losses

TDT | Manama

Email : editor@newsofbahrain.com

Lebanon’s cabinet approves draft law on financial crisis losses Beirut, Lebanon Lebanon’s government yesterday approved a draft law to distribute financial losses from the 2019 economic crisis that deprived many Lebanese of their deposits despite strong opposition from political and banking officials.

The draft law is a key demand from the international community, which has conditioned economic aid to Lebanon on financial reforms.

It will be submitted to the country’s divided parliament for approval before it can become effective.

The cabinet passed the draft bill with 13 ministers in favour and nine against. It stipulates that each of the state, the central bank, commercial banks and depositors will share the losses accrued as a result of the financial crisis.

Prime Minister Nawaf Salam told journalists after the session that the bill “is not ideal... and may not meet everyone’s aspirations” but is “a realistic and fair step on the path to restoring rights, stopping the collapse... and healing the banking sector”.

According to government estimates, the losses resulting from the financial crisis amounted to about $70 billion, a figure that is expected to have increased over the six years that the crisis was left unaddressed.

Depositors who have less than $100,000 in the banks, and who constitute 85 percent of total accounts, will be able to recover them in full over a period of four years, Salam said.

Larger depositors will be able to obtain $100,000 while the remaining part of their funds will be compensated through tradable bonds, which will be backed by the assets of the central bank. The central bank’s portfolio includes approximately $50 billion, according to Salam.