- 19:05
At a luncheon debate hosted by the École supérieure des affaires (ESA), Karim Souhaid, the Governor of Lebanon’s Central Bank (BDL), presented his assessment of the country’s economic situation – “slowly but surely moving in the right direction” – to around 40 members of the Mouvement des entreprises de France (MEDEF), currently on an exploratory visit to Lebanon and Syria.
For context, MEDEF represents more than 200,000 micro-, small- and medium-sized French businesses.
Souhaid also outlined BDL’s proposal for a “Banking Restructuring Framework,” under which it would shoulder the largest share of the financial burden.
He emphasized “the Bank’s duty to rebuild a banking system that is solid, well-capitalized, well-governed and well-regulated.” “A sector capable of repaying depositors – in full if possible, gradually if necessary – but always in a manner that preserves the trust they have placed in us,” he added.
BDL: The State’s Bank, Not Its Banker
In his assessment, Souhaid described “a central bank that has been both architect and victim of an unprecedented banking and financial crisis, which brought Lebanon’s real economy to a standstill.” “Today, it has also become the main engine of its recovery,” he added.
He explained that “the central bank was a player, because the regulator it should have been, sometimes gave in to the temptation of riding the banking sector’s profit euphoria and meeting the state’s financing needs without limits. It was also a victim, because this role weakened its balance sheet and plunged the economy into an unhealthy dependence.”
Souhaid emphasized that “today’s BDL is no longer the state’s banker, but the state’s bank.” “It is an institution that now aims to be closer to Colbert, builder of lasting structures, than to Gordon Gekko, driven by profit. A disciplined and responsible bank, sometimes restrained, but focused on stability and long-term sustainability,” he noted.
BDL Unveils a ‘Banking Restructuring Framework’
Relying on the provisions of the Lebanese Code of Money and Credit (CMC), which stipulates that BDL does not legislate but rather advises, guides and proposes, Souhaid presented the framework, which rests on four pillars:
1.Reducing BDL’s deficit by eliminating irregular claims and obligations from its balance sheet, including deposits of questionable origin, unjustified conversion of Lebanese pounds into dollars after the crisis, excessive interest and similar items.
2.Segmenting regular deposits into three categories: small ($1–$100,000, representing 84.8%), medium ($100,000–$1 million, 14%) and large (over $1 million).
3.Repaying depositors – prioritizing small depositors and a portion of medium-sized accounts — in cash over a defined period, with the remaining balance repaid in securities backed by BDL assets (gold, claims on the state, real estate and corporate assets and reserves).
4.Distributing the financial burden among the state, the BDL and commercial banks, with BDL shouldering the largest share of the cost.
Credit: The Lifeblood of the Economy
Souhaid repeatedly stressed the importance of credit, which he described as “the lifeblood of the economy,” echoing the words of economist Jean Tirole: “Without credit, there is no activity; without activity, neither the public nor the private sector can survive.”
He expressed confidence in the authorities’ commitment – including the president and the prime minister – to pursue reforms. “This undertaking cannot succeed without cooperation. It will involve the government, our international partners – primarily the IMF, the World Bank, France and more broadly the global community – and also, I trust, the engagement of French entrepreneurs and investors, who have long regarded Lebanon as a place of innovation, resilience and regional influence,” he concluded.
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