IMF holds new talks with Lebanon on bank restructuring strategy

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The International Monetary Fund said its staff held a new round of talks with Lebanon this week focusing on the banking sector's restructuring strategy, as Beirut looks to secure…

The International Monetary Fund said its staff held a new round of talks with Lebanon this week focusing on the banking sector's restructuring strategy, as Beirut looks to secure a new agreement with the multilateral lender.

Lebanon's banking resolution law is seen as a critical component in securing an economic reform programme with the IMF. A staff-level agreement was initially struck in 2022 after the country's economy collapsed in 2019, although the government had been slow to implement the IMF's recommended changes.

“This is part of our close discussions with the Lebanese authorities to underpin a comprehensive reform programme to restore financial stability in the country and to support an economic recovery in the country,” IMF communications director Julie Kozack said.

Yassine Jaber, Lebanon's Finance Minister, said talks were being held with a view to reaching a new agreement with the fund. He said a law distributing losses between the state, the country's central bank, commercial banks and depositors remains a sticking point in negotiations.

Ms Kozack did not say whether the IMF hopes to reach a preliminary agreement this week.

“The mission is focused on the banking sector restructuring strategy and the mission will communicate at the end of the mission with whatever relevant updates they have,” she said.

The Lebanese parliament passed a banking resolution law in August, a development welcomed by the IMF and characterised as a major step forwards in revamping the banking sector.

Last month, Lebanese President Joseph Aoun appealed to the Constitutional Council over an amendment involving the central bank's independence and power. The IMF said it would assess any changes to the legislation to ensure they are consistent with international standards.

The IMF has said Lebanon must implement a 2027 budget, a medium-term fiscal framework and other reforms to secure any agreement.

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