Details of Lebanon’s financial recovery plan reveal the bankruptcy and closure of several banks.

(Reuters)

The financial recovery plan approved by the Lebanese cabinet on Friday revealed that the government would cancel “a significant portion” of Lebanon’s central bank’s foreign currency obligations to commercial banks and dissolve banks that were not operational by the end of November. .
Lebanon’s cabinet approves plan The new parliament on May 15.
The plan includes a number of measures required by the International Monetary Fund to release the necessary funds in the initial agreement with Lebanon reached in April, which could help free the country from the worst financial crisis in three years. Years.
In April, Lebanon reached an expert-level agreement with the International Monetary Fund to benefit from a 46-month “extended financial facility”, according to which Lebanon sought access to about $ 3 billion.
Lebanon’s Deputy Prime Minister al-Shami said the cabinet’s approval of the financial recovery plan would “go forward,” but that parliament would soon have to pass a number of necessary laws.
He added that laws such as the Bank Account Secrecy Restrictions and the Capital Controls Bill have repeatedly failed to pass by delegates.
“Once the new parliament convenes, we hope these measures can be passed quickly, but you know, we can not impose it on parliament,” he told Reuters. Al-Shami added: “We can put what we see on paper, but we need to make sure that everything we promise is implemented in the future.”
“I can not predict whether they will do it or whether there is a political will to do it,” he added. The plan, which was approved by the Cabinet on Friday, will fully review the central bank’s financial position by July. The plan said: “Initially, we will cancel most of Lebanon’s central bank’s foreign currency obligations to banks in order to reduce the central bank’s capital deficit.”

See also  The World Health Organization has lost contact with Al-Shifa Hospital in Gaza

Bank recapitalization

The plan states, “Determining the extent of the need to recapitalize banks individually and redefining their balances. Bank wise loss assessment and analysis of the deposit system and deposit system of 14 major banks (representing 83% of assets) will be conducted by the Banking Regulatory Authority with the assistance of eminent persons. International organizations including supervisory participation. This assessment will be completed by the end of September 2022.
In addition, the complete internal capitalization of banks will be carried out through “significant contributions” from bank shareholders and key depositors. The plan stated that “every possible bank will protect the maximum number of small depositors” but, unlike previous draft plans, did not specify the minimum amount to be secured.
But the project document added that banks that could not last until the end of November would be liquidated. He added that the government would consolidate the official exchange rate and end the existence of different exchange rates.
The decline led to the inability of depositors to get their savings, and the local currency lost more than 90% of its value. The Association of Banks in Lebanon rejected an earlier draft of the plan in February, saying it would lead to a loss of confidence in the financial sector.
In April 2020, the Committee of Ministers approved the recovery plan, but rejected it due to a dispute between political parties, Bank to Liban and commercial banks over the distribution of losses.
Mike Azhar, an expert on the Lebanese financial crisis and a former lecturer in international economics at Johns Hopkins University in the United States, said the current plan was “little progress” than what was acknowledged two years ago.
“This is the only hope we have at the moment, but there are many flaws in the text and the chances of it being implemented are slim,” he told Reuters.
Splits in the newly elected parliament will hamper efforts to pass the necessary legislation. Azhar added that language and the withdrawal of stolen assets were not mentioned in the final version of the plan in previous drafts related to the withdrawal of funds transferred abroad.
Many details are not yet clear and there is room for correction in the margins, ” he said. The plan did not mention the establishment of a sovereign fund to manage state assets, but promised to restrict the use of necessary public assets by commercial banks in Lebanon.
The Association of Banks in Lebanon rejected an earlier draft of the plan in April; It said it was bearing the brunt of the government’s estimated $ 72 billion deficit in the financial sector.
A spokesman for the association said, “The government has not yet convened to discuss the decision, so it is sticking to its latest statement.”
Lebanese banks have been a major lender to the government for decades; It helped finance a corruption-free and corrupt country that suffered a recession in 2019.

See also  For the second time... Postponing the signing of the final agreement between the civil forces and the military units in Sudan | news
  • Rolf Colon

    "Creator. Award-winning problem solver. Music evangelist. Incurable introvert."

    Related Posts

    • World
    • January 11, 2024
    • 1073 views
    Japan is inspired by creative ideas to build earthquake-resistant homes

    For more than a century, Japan has been able to build earthquake-resistant homes on this island known for its severe earthquakes. Last week, after a 7.5-magnitude earthquake hit Ishikawa Prefecture…

    • World
    • January 10, 2024
    • 859 views
    More than 23 thousand martyrs.. Gaza health announced the new death toll news

    Today, Wednesday, the Ministry of Health in Gaza announced that the death toll from the Israeli occupation has risen to 23,357 martyrs, with 59,410 injured since the war began on…

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    You Missed

    How to Choose the Right Mattress: Find the Best Fit for You

    How to Choose the Right Mattress: Find the Best Fit for You

    Emils Kerimovs on Wealthtech Revolution: Investing in the Middle East and Africa

    Emils Kerimovs on Wealthtech Revolution: Investing in the Middle East and Africa

    Forex Brokers Review: Is ITBFX A Safe Broker?

    Forex Brokers Review: Is ITBFX A Safe Broker?

    Best Kitchen Renovation Ideas to Upgrade Your Space

    Best Kitchen Renovation Ideas to Upgrade Your Space

    Where to Get a Professional Massage in Dubai

    Where to Get a Professional Massage in Dubai

    Dog Spay Surgery 101: Benefits, Risks, Cost, and Aftercare

    Dog Spay Surgery 101: Benefits, Risks, Cost, and Aftercare