IMF Reports Progress, No Deal Yet on Lebanon Bank Restructuring

The International Monetary Fund said talks with Lebanon on restructuring its banks have produced progress, but no agreement on a strategy. A statement issued on Friday followed a mission to Beirut on November 10-13 led by Ernesto Ramirez Rigo.

The visit continued discussions begun in September on the key elements of a restructuring plan. Much of the focus fell on aligning the draft Financial Stabilization and Deposits Recovery Law, which is before Parliament, with international standards.

Ramirez Rigo said the mission made progress clarifying the approaches under consideration by Banque du Liban, the central bank, and the government. More work is needed before the two sides agree a strategy for an effective and durable restructuring that leaves a sound, resilient banking system.

He said the Bank Resolution Law, which sets out how distressed banks are resolved and liquidated, should be applied in all cases. Applying it everywhere, the fund said, would make the process transparent and predictable.

Further talks are needed on the criteria for maximizing deposit repayments. Those criteria must be consistent with liquidity at Banque du Liban and across the banking sector, with public debt sustainability and with restoring the central bank's solvency.

Ramirez Rigo said the deposits law has to preserve the hierarchy of claims when losses are allocated, which he said would give depositors the greatest protection.

Implementing the resolution law alongside the deposits law once the latter is adopted is essential, according to the fund. Carried out together, the two would help restore financial stability and maximize deposit recovery.

Earlier visit

The November mission followed one on September 15-18, when fund staff welcomed approval of amendments to the resolution law and said they aligned Lebanon's framework with international best practice. In September the fund also said depositors should not absorb losses before shareholders and junior creditors under the deposits law.

Ramirez Rigo said then that economic activity was expected to contract significantly in 2026, citing conflict and regional security developments. Inflation remained in double digits in September, and the current account deficit had widened, mainly on rising energy costs.

He said the mission looks forward to continuing engagement with Lebanese authorities in the coming weeks and that the fund remains committed to supporting a comprehensive economic reform program.

Lebanon reached a staff-level agreement with the fund in April 2022 on a 46-month program that could have unlocked $3 billion. The reforms tied to it stalled. Authorities asked for a new fund-supported program in March 2025.

Who absorbs the losses is the question running through all of it. The deposits law fixes the order in which shareholders, junior creditors and savers are paid, and Parliament's handling of the draft will decide whether the cleanup reads as credible to depositors and creditors alike.