$79.5 Billion: Lebanon's Central Bank Governor Reveals the Fate of Deposits and Gold

Lebanon's Central Bank Governor Karim Sayed stated in an exclusive interview with CNN Economics, that he does not expect the fiscal gap law to be passed before six to eight months, as ongoing comments on the draft continue to prevent agreement between Lebanese authorities and the International Monetary Fund.

Sayed’s remarks provide a clearer timeline for one of the most sensitive laws in Lebanon’s path toward resolving the financial collapse it has faced since 2019.

Following the passage of amendments to the Banking Sector Reform Law in August, the fiscal gap law—also known as the Financial Restructuring and Deposit Recovery Law—remains the crucial step in determining the scale of losses, their distribution, and the mechanism for returning funds to depositors.

Sayed clarified that the draft law was submitted by the government at the end of 2025, but noted that the Central Bank has raised objections, along with “strong” comments from the International Monetary Fund.

He added that efforts are underway to align perspectives, expecting the agreed-upon version to reach the Parliament by the end of September, before qualifying: “If we judge the pace of law adoption in Lebanon, I don’t think it will pass before six to eight months.”

Liabilities of $79.5 Billion and ‘Defects’ Needing Audit

On deposits, Sayed said the Central Bank’s liabilities toward banks and depositors currently stand at approximately $79.5 billion, potentially declining to around $79 billion by year-end. He added that cumulative payments to depositors under Circulars 158 and 166 have reached about $6.1 billion.

When asked whether depositors would bear part of the losses, he said the so-called “defects” within the liabilities recorded in the Central Bank’s budget “could amount to up to 30 percent of the value,” adding that remaining amounts after audit could be paid to depositors in cash over several years or through bonds.

The Central Bank previously used the term “defects” to refer to claims it considers unjustified, including deposits of unknown origin, book transfers from the Lebanese pound to the dollar made after the crisis began without actual coverage, and interest rates described as inflated. How to sort these amounts and assign responsibility remains one of the most contentious issues among depositors, banks, and the state.

Gold for Depositors, Not for State Financing

Regarding gold reserves, Sayed took a conditional stance, affirming he is not opposed to selling gold in principle, but did not fully rule it out if the Central Bank cannot meet urgent obligations toward depositors.

He said: “I am against selling gold without a clear framework, and in principle, I am not in favor of selling it,” before adding that raising the issue would only be justified if the Central Bank faced an obligation it cannot fulfill and there was an urgent need to pay depositors.

Sayed emphasized that “gold is not designated for state projects, nor for paying the state or banks.”

This position does not constitute a decision to sell gold—the choice does not rest solely with the governor. Law No. 42 of 1986 prohibits any direct or indirect disposal of the Central Bank’s gold assets without a legislative text issued by the Parliament.

Sayed pointed out that the bank holds other real and financial assets that could be relied upon to meet its obligations, expressing hope that improved political conditions will allow avoiding the sale of core assets.

$12 Billion in Foreign Assets… But Not Free Reserves

On the level of reserves that the Central Bank must not fall below, Sayed said it is impossible to define a fixed “red line” amid the ongoing crisis and war.

He explained that the foreign assets listed in the bank’s balance sheet—amounting to about $12 billion—do not represent a free stock fully owned by the central bank, but include mandatory reserves deposited by banks and Lebanese state deposits.

Sayed praised the Ministry of Finance’s performance in improving tax collection and reducing spending, describing it as “fiscal discipline.”

Stability in the Lira Rate, Not Official Pegging

Sayed distinguished between the stability of the Lebanese pound’s exchange rate and an official peg, stating: “We are currently facing stability of the lira, not a peg.”

He linked this stability to demand for the local currency to pay taxes, explaining that annual state collections of nearly $6 billion in Lebanese pounds create demand and help maintain monetary stability.

On the possibility of removing zeros from the currency, Sayed said such decisions belong to a later stage, noting that current conditions do not allow it to be a priority.

He compared the situation to Syria, where the war has ended, while Lebanon continues to face war and restrictions limiting the flow of foreign investment.

In discussing Lebanon’s inclusion on the European Union’s list of high-risk countries, Sayed said exiting monitoring lists is not merely a political or legal matter, but also an organizational challenge.