Lebanon's Milestone Move: Restructuring Post-Crisis Banking

Lebanon's Cabinet approved a draft law addressing bank losses from the 2019 financial meltdown. The law outlines a mechanism to return depositors' funds and awaits parliamentary approval. The legislation proposes structured repayment plans for smaller depositors and tradable bonds for larger amounts, aiming to rebuild the financial sector and restore confidence.

On Friday, Lebanon's Cabinet took a significant step by approving a draft law aimed at addressing the losses suffered by banks during the financial meltdown of 2019. This legislation marks the government's first move to return funds to individual depositors and awaits further approval from parliament.

The country's financial collapse, driven by systemic corruption and mismanagement, has left many Lebanese citizens unable to access their savings. While the Cabinet's decision has been lauded as a landmark effort, doubts remain about the legislation's effectiveness, as the blame game continues over who is responsible for the economic crisis.

Lebanon's Prime Minister Nawaf Salam reassured depositors, stating that the new law would facilitate the recovery of funds over a span of four years. The government's proposal includes converting large deposits into bonds backed by the Central Bank's assets. With Lebanon's economy still reeling from the crisis, the IMF has encouraged such reforms to restore investor confidence.

(With inputs from agencies.)