The Association of Banks in Lebanon welcomes the signing of the Staff Level Agreement with the IMF as it is a crucial first step towards the implementation of an IMF program. We would like to congratulate the government for the efforts exerted to reach this important milestone.
The IMF program is the only viable way out of the acute and unprecedented crisis and is vital to restore confidence and stop the hemorrhage of remaining reserves in the financial system. Since the beginning of the crisis, the financial gap has been increasing at an alarming rate mostly driven by (1) the subsidy schemes and market interventions to procure the hard currency for imports, and (2) FX conversions. In fact, the two and a half year delay in dealing with the crisis has increased the gap by an estimated $35 billion. We, therefore, stress the importance of time in securing all the required reformist legislation and approvals to enable the full implementation of the IMF program, including but not limited to the long overdue capital controls law, a macro-economic and debt sustainability strategy and governance reforms.
The banking sector was and will remain the engine of growth and one of the pillars of the Lebanese economy, and we look forward to regaining this vital role to support Lebanon’s economic recovery.
While the ABL has not received the details of the financial restructuring plan and the distribution of the losses amongst all stakeholders, the banking sector remains open to any solution that resolves the crisis. We would expect the plan to include a fair allocation of the loss on the government/BDL given the hierarchy of responsibilities with the aim to maximize depositors’ recovery.
The real work starts now, and the test will be in the implementation of the ambitious and heavy sets of outlined reforms. We stand ready to support the government from our side in order to achieve a fair solution that secures a prosperous future for our country.
Communication & PR Department