Lebanon central bank head concerned over draft law on deposits

Lebanon’s central bank governor has expressed some reservations over a draft law allowing depositors gradually to recover funds frozen in the banking system since a financial collapse in 2019, a move critical to reviving the economy.

Karim Souaid described the proposed timetable for the cash component of deposit repayments as “somewhat ambitious” in a statement on Tuesday.

He urged the cabinet to conduct a careful review of the draft law, calling for clarifications to ensure fairness and credibility before it is submitted to parliament.

The central bank governor said the draft required further refinement, including clearer provisions to guarantee equitable treatment of depositors and to reinforce the state’s commitments under the law.

The 2019 financial collapse — the result of decades of unsustainable financial policies, waste and corruption — led the state to default on its sovereign debt and sank the Lebanese pound.

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The draft law marks the first time Beirut has put forward legislation aimed at addressing a vast funding shortfall — estimated at $70 billion in 2022 but now believed to be higher.

Prime minister Nawaf Salam on Monday urged ministers to swiftly approve the draft legislation.

The cabinet discussed the law on Monday and Tuesday and is set to continue discussions on Friday.