Lebanon’s latest draft plan to restructure its crippled banking sector aims to resolve one of the world’s largest financial collapses — but it may not go far enough to meet the International Monetary Fund’s (IMF) requirements for a bailout.
The plan reportedly seeks to distribute the more than $70 billion in financial sector losses among the state, the central bank, commercial banks, and depositors. It proposes protecting small depositors by repaying accounts under $100,000 over three to five years, while large depositors may face extended repayment periods or partial clawbacks of high interest payments earned before the crisis. The plan also suggests issuing asset-backed bonds linked to state holdings, including gold, to help bridge the financial gap.
However, the IMF’s demands for a comprehensive and credible reform framework extend well beyond these measures. The Fund has repeatedly called for clear burden-sharing mechanisms, transparent accounting of financial losses, and fully enacted banking resolution laws — all of which remain pending. Analysts warn that Lebanon’s reliance on state assets to cover losses risks placing an unfair burden on future generations instead of holding banks and large depositors accountable.
Equally concerning is the lack of a cohesive implementation roadmap. Years of institutional decay, political division, and corruption have eroded confidence in Lebanon’s ability to execute complex financial reforms. Without strong governance and an empowered oversight framework, the IMF may deem the plan insufficient.
To unlock the long-awaited $3 billion IMF package, Lebanon must finalize and implement reforms addressing fiscal transparency, anti-corruption measures, and sustainable debt restructuring. Protecting small depositors, restoring trust in the banking sector, and securing concessional financing from international partners will also be crucial.
Unless substantial progress is made on these fronts, Lebanon risks missing another opportunity to stabilize its economy — prolonging a crisis that has already decimated living standards and drained public trust in the nation’s financial system.