Lebanon’s Council of Ministers has unanimously approved amendments to the 2025 banking resolution law after intensive IMF consultations, but the Central Bank’s explicit reservations and a long history of stalled or withdrawn reforms raise doubts about whether this latest push wil
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The Lebanese government has unanimously approved amendments to two critical articles of the 2025 banking resolution law following intensive consultations with the IMF, but central bank reservations and the history of withdrawn drafts raise questions about whether this round will deliver genuine restructuring or repeat past cycles of delay. On 30 April to 4 May 2026, Lebanon’s Council of Ministers took a unanimous decision to amend two key articles of the 2025 banking resolution framework after 85 hours of direct engagement with the International Monetary Fund. The draft has now been referred to parliament. While presented as progress toward IMF requirements for bank restructuring and loss allocation, the move comes with explicit reservations from the Central Bank and follows a pattern of previous reform attempts that were later diluted or withdrawn. For millions of depositors still locked out of full access to their savings seven years after the 2019 collapse, the latest development raises a familiar question: will this process finally impose real costs on banks and connected interests, or will political and institutional friction once again preserve the status quo?
Lebanon has been trapped in a severe banking crisis since 2019, with total estimated losses exceeding $80–90 billion. Depositors continue to face strict limits on withdrawals, while the economy operates largely on a cash basis. The 2025 banking resolution law represented an initial attempt to create a legal framework for bank restructuring, loss allocation, and eventual sector cleanup. However, implementation has encountered repeated obstacles, including constitutional challenges and political disagreements over the distribution of losses and protection of smaller accounts. The country is also dealing with the economic fallout from the March 2026 conflict and large-scale displacement, which has increased pressure on public finances and liquidity. Successive governments have sought IMF support, but the Fund has consistently made meaningful financing conditional on credible progress in the banking sector, including transparent loss distribution and stronger governance.
The cabinet approved targeted changes to two specific articles in the 2025 law. These amendments focus on aspects of loss allocation and the operational mechanics of bank resolution. According to available details, the revisions aim to bring the framework closer to IMF technical standards while addressing some implementation concerns raised during consultations. The changes are described as technical in nature but carry significant implications for how losses are assigned between shareholders, depositors, and the state. They also seek to clarify procedures for resolving failing banks and recapitalizing viable ones. The exact wording of the revised articles has not been fully publicised, but the referral to parliament indicates the executive branch views the current text as sufficiently aligned with international expectations to move forward.
The amendments followed 85 hours of intensive discussions with IMF staff. These talks focused on aligning Lebanon’s domestic framework with international best practices for bank resolution, particularly regarding loss recognition, burden sharing, and governance requirements for restructured institutions. The IMF has long insisted on a comprehensive strategy that includes realistic valuation of bank assets, clear rules for writing down losses, and mechanisms to restore lending capacity. The extended consultation period suggests that Lebanese authorities made concessions in certain areas to secure the Fund’s technical endorsement, though full agreement on all outstanding issues was not reached. The referral to parliament now shifts the process from technical negotiations to legislative debate.
The Banque du Liban expressed reservations about aspects of the approved amendments. Central Bank Governor Karim Saeed and senior officials raised concerns regarding financial stability risks, implementation timelines, and the potential impact on the broader banking sector. This tension reflects deeper institutional dynamics. The central bank, as the sector regulator, has historically prioritised liquidity management and systemic stability, sometimes clashing with the executive branch’s push for faster alignment with IMF conditions. Past reform efforts have seen similar objections, occasionally leading to withdrawals or significant revisions. The current episode highlights ongoing questions about the balance of authority between elected officials and the technically independent central bank in shaping financial policy.
President Joseph Aoun and Prime Minister Nawaf Salam backed the cabinet decision, signalling a desire to demonstrate reform momentum amid multiple national challenges. The Finance Ministry played a central coordinating role in the IMF discussions and draft preparation. The bill now enters parliament, where it faces a complex political landscape. Different blocs are expected to scrutinise provisions related to loss allocation and potential state involvement in recapitalisation. Historical experience shows that parliamentary debate often introduces further amendments, particularly on sensitive issues affecting depositors or specific banking interests. The current security environment and postponed elections add another layer of complexity to the legislative timeline.
The amendments could influence the scale and timing of depositor haircuts, the requirements for bank recapitalisation, and the overall pace of sector recovery. For ordinary citizens, the outcome will help determine when and how much of their trapped savings might become accessible again. For the banking sector, successful implementation would represent a step toward restoring confidence and lending capacity. Failure to advance meaningfully, however, risks prolonging the current liquidity constraints and reserve pressures. Rapid depletion of central bank reserves in recent weeks underscores the urgency of credible restructuring.
This latest banking reform push carries direct consequences for Lebanese citizens whose savings remain restricted. It also tests the government’s ability to deliver on governance commitments at a time when international support for reconstruction and stabilisation depends on demonstrated institutional progress. The recurring friction between the executive, central bank, and parliament points to deeper challenges in separating technical decision-making from political considerations. Economically, prolonged delays sustain a fragmented financial system that limits growth and investor confidence. At the national level, the outcome will influence Lebanon’s credibility in broader negotiations, including those tied to post-conflict recovery and external financing.
While the cabinet’s unanimous approval marks another formal step in Lebanon’s long banking reform journey, the documented central bank reservations and the history of previous drafts suggest that implementation will encounter the same entrenched obstacles that have hindered progress since 2019. Lasting change will require more than parliamentary passage. It will demand genuine insulation of the resolution process from political and institutional capture, a test that earlier rounds have consistently struggled to meet.
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