Lebanon Approves Landmark Banking Reform Law to Address Long-Standing Financial Crisis

The Lebanese government has taken a major step toward resolving its enduring financial crisis by approving a comprehensive draft law to restructure and reform the country’s banking sector. The move, announced on April 12 following a four-hour Cabinet session led by Prime Minister Nawaf Salam, is seen as a critical milestone in Lebanon’s recovery efforts.

The new legislation, comprising 39 clauses, aims to protect depositors — with a strong focus on small savers — and restore confidence in a banking system battered by years of economic instability. Information Minister Paul Morcos, speaking after the session at the Grand Serail, said the law represents a key component of a broader reform agenda.

“Within a few weeks, we will achieve the reform package that Lebanon, its economy, and its banking sector need, especially for the benefit of small depositors,” Morcos said. He added that a separate draft law to address Lebanon’s financial deficit is currently being prepared, which will further contribute to fiscal stability.

This latest banking reform follows recent amendments to Lebanon’s banking secrecy laws — a crucial demand by the International Monetary Fund (IMF) for any potential financial assistance. Morcos confirmed the reforms are in line with IMF conditions and reflect the government’s commitment to implementing the necessary changes.

Economy Minister Amer El-Bisat emphasized the complexity of banking reform ahead of the Cabinet session, noting that extensive political and legal discussions were required. Labor Minister Mohammad Haidar also clarified that while the law focuses on restructuring the banking system, it does not immediately resolve the issue of depositors’ frozen funds.

The reform was welcomed by the international community. The United Nations Special Coordinator for Lebanon praised the approval of the draft law as a demonstration of political will, urging that the momentum continue through parliamentary ratification and implementation. “This positive momentum must continue in parliament and, of course, later, in practice,” UNSCOL stated on social media platform X.

Lebanon’s economic meltdown, ongoing since 2019, has seen the local currency lose over 98% of its value and pushed a large portion of the population into poverty. Millions remain locked out of their bank deposits, intensifying pressure on the government to enact reforms.

Lebanese officials, including Central Bank Governor Karim Souaid, are scheduled to meet IMF representatives later this month during World Bank meetings in Washington to discuss a potential financial rescue package.

Meanwhile, World Bank Managing Director of Operations Anna Bjerde began a two-day visit to Lebanon on May 7 to explore strategic support avenues. Discussions centered on long-term development goals, particularly in water security, renewable energy, and digital services — key sectors for Lebanon’s sustainable recovery.