Good News for Depositors: Decisive Progress in IMF Talks on Restoring Funds

The Lebanese delegation attending the annual meetings of the International Monetary Fund (IMF) and the World Bank Group in Bangkok continues its engagements. Led by Finance Minister Yassine Jaber, a series of meetings were held discussing financial and banking reforms paving the way for an agreement with the Fund, financing recovery, solar energy, small and medium enterprises, and humanitarian and social support.

Jaber chaired an expanded meeting with Jihad Azour, Director of the Middle East and Central Asia Department at the IMF, and his deputy responsible for the Lebanon file, Thanos Arvanitis. Participants included Economy and Trade Minister Amer Bsat, Governor of the Central Bank of Lebanon Karim Saeed, Director General of Finance Georges Maarawi, Chairman of the Banking Control Commission Mazen Sweid, Presidential Advisor Rawaa Harati, and Finance Ministry advisors Claudine Karki and Zeina Qassem.

The meeting discussed the draft law addressing the financial gap and restoring deposits, as well as progress in banking reforms. Both sides confirmed that cooperation is moving in the right direction, while participants praised the results of financial stability and discipline in public finances. Jaber stressed the necessity of enacting a fair, credible, and sustainable law that protects small depositors and restores confidence in banks and their ability to finance the economy.

Azour affirmed the Fund's commitment to helping Lebanon and its readiness to accelerate work and provide technical support, calling for preparation for parliamentary debate, informing international partners of the progress made, and completing parallel reforms, including the energy sector. Arvanitis clarified that enacting the law opens the path toward a medium-term fiscal framework and a comprehensive program with the Fund. It was agreed to continue weekly technical meetings.

In a meeting with Nigel Clark and the IMF team concerned with Lebanon, the delegation explained that the President's referral of the law reforming the situation of banks to the Constitutional Council falls within his powers and aims at clarification; it does not target a specific article nor affect the independence, composition, or tools for settling bank situations agreed upon with the Fund.

They presented the work of three specialized groups on settling bank situations and recapitalization, sovereign debt owed by the state to the Central Bank, and liquidity, holding up to four meetings per week. The work aims to agree on fundamental principles before the IMF mission visit between November 9 and 13, to include them in an annex to the law referred to the Parliament.

The discussion addressed the economic slowdown in the third quarter after resilience in the first half of the year. The delegation affirmed the priority of monetary stability and the role of coordination between the Ministry of Finance and the Central Bank, financial discipline, and tax collection in maintaining it, noting the continued partial repayment of deposits from mandatory reserves.

It highlighted increasing social and financial pressures due to citizen displacement resulting from Israeli attacks in the south, confirming the continuation of reforms, reducing the cash economy, and restructuring banks. The IMF team expressed readiness to support and continue coordination in preparation for the mission visit.

Additionally, Jaber and the Finance Ministry delegation met with the Executive Director representing Lebanon on the Fund's Board, with representatives from the Presidency, Government, and Banking Control Commission. They confirmed improved tax revenues and continued efforts against evasion and digital transformation, including electronic invoicing. The Executive Director's office expressed support for Lebanon, stressing the importance of achieving tangible results during the mission visit to pave the way for a program with the Fund.

In a meeting with Ousmane Dione, Vice President of the World Bank Group for the Middle East, North Africa, Afghanistan, and Pakistan region, attended by Bsat and the Finance Ministry delegation, Jaber proposed directing part of available financing to small loans for households to install solar energy systems and reduce energy costs, with the preparation of a concept note in cooperation with the International Finance Corporation.

He also proposed establishing a trust fund that does not create debt for the state to finance small and medium enterprises, requesting support from the World Bank and IFC in structuring and launching it. It was agreed to hold a working session with donor partners starting next week.

Discussions included updating regional integration studies for completion by December, electricity reform, and developing public-private partnerships. Dione affirmed the World Bank's readiness to accompany reforms and provide budget support once a program with the IMF is enacted.

In his meeting with Norwegian Minister of International Development Aasmund Aukrust, Jaber discussed the conflict's repercussions on the economy, public finances, and living conditions, affirming the priority of securing needs for displaced persons and vulnerable groups, enhancing social protection, and ensuring continuity of health and education services.

He stressed continuing financial reforms and modernizing tax and customs administration to direct resources toward urgent needs, and the necessity of providing coordinated international support for recovery and reconstruction that integrates with World Bank programs and government priorities.