BEIRUT: Lebanese Prime Minister Nawaf Salam stated that his government can overcome differences with the International Monetary Fund regarding a draft law that would allow depositors to recover billions of dollars stuck in the struggling banking sector.
In December, Salam’s government approved a rule known as the Financial Gap Law, which allows depositors to withdraw up to $100,000 each over the next four years, with larger amounts being converted into bonds backed by central bank assets. The cash withdrawals will be financed by local banks and the regulatory authority.
The IMF is holding talks with Lebanon regarding a financing program and seeks the implementation of a package of government measures before committing to providing funding, most notably restructuring banks and repaying depositors’ funds.
In an interview with Bloomberg, Salam explained that the IMF “wants further clarifications on a number of issues,” adding: “In my opinion, any observations or statements that might create a gap can be bridged.”
Lebanon defaulted on about $30 billion in international bonds in 2020, amid the worst economic crisis it has witnessed since the 19th century. Investors see cooperation with the IMF as crucial for achieving a positive recovery.
