BELIEF, Bank Restructuring, Banking Crisis, Economic Update

Lebanon’s Banking Resolution Stalls Amid Tussle Over Central‑Bank Authority

16:30 | 30 June 2026LIMS output
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The Lebanese government, the Central Bank of Lebanon (BdL) and the International Monetary Fund (IMF) have been negotiating amendments to Articles 3 and 13 of the bank‑restructuring law. The talks have revealed a deeper conflict about who ultimately decides the fate of distressed banks. Critics accuse the IMF of dragging its feet, while supporters argue that an IMF programme is essential for restoring confidence in the sector.

LIMS explained that the law seeks to establish a clear framework for dealing with troubled institutions, outlining mechanisms for mergers, sales or liquidations and specifying the entity authorised to make those decisions. The dispute over Articles 3 and 13 centres on the BdL’s autonomy during sector restructuring. In essence, it is a battle over who holds ultimate authority in deciding the fate of struggling banks.

LIMS has warned that Lebanon’s greatest loss has been the time wasted over the past six years trying to pass a suitable resolution framework. In most international cases, banking crises are resolved within days or weeks to limit contagion. In Lebanon, however, the paralysis persisted for years, shrinking the national GDP from an estimated $54 billion pre-crisis to around $20 billion. The cumulative loss of the economy over the past 6 years far exceeds the size of the banking losses that are being debated.

Continued delays have imposed significant economic costs: businesses have lost access to credit, investment has declined, and job creation has suffered. The crisis has also entrenched a cash economy that allows unlicensed financial intermediaries to operate. In June, Hezbollah‑backed Al‑Qard Al‑Hassan was investigated over oversight concerns, underscoring the need of returning transactions into the legitimate banking sector. Completing financial reform is therefore an essential to restore confidence and enable private‑sector recovery.

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