The Governor of the Central Bank of Lebanon, Karim Souhaid, clarified the situation by declaring that Lebanon’s crisis is not purely a financial one but rather a systemic crisis in which the banking sector has become a victim. This is what Souhaid stated clearly during the parliamentary session dedicated to discussing the 2025 budget draft, affirming:
“The crisis is a systemic crisis, not a banking sector crisis in itself.”
In line with Souhaid’s remarks, Finance Minister Yassin Jaber also explained, during the Union of Arab Banks Conference held on Thursday, September 18, 2025, that:
“The recent crisis differs from previous ones in that it encompasses the entire banking system, including the central bank as one of its components. It has thus become a financial system crisis, especially after the Lebanese government decided in April 2020 to stop servicing its foreign-currency Eurobond debt.”
The statements by Souhaid and Jaber clearly define the nature of Lebanon’s crisis. These remarks come at a time when some political circles are pushing for full compliance with the International Monetary Fund’s (IMF) conditions, portraying them as the only way to rescue Lebanon from its crisis.
In opposition to this submission to the IMF, Governor Karim Souhaid has adopted a different reformist approach aimed at protecting depositors’ funds and preserving what remains of confidence in the banking system.
However, this reform plan—based on a fair and gradual solution to the depositors’ crisis and a comprehensive plan to restructure the banking sector—has provoked financial and political circles close to the IMF, prompting them to launch a fierce campaign against the governor.
The Code of Money and Credit is clear: handling deposits is the government’s responsibility!
In this context, the Code of Money and Credit reaffirms the limits of the Central Bank’s role in the crisis:
- The Bank is independent under Article 13.
- Its mission under Articles 70 and 72 is limited to maintaining monetary and banking stability, not bearing the state’s losses.
- Articles 81–92 state that financing the state is only a temporary exception.
- While Article 113 obliges the government to recapitalize the Central Bank if its capital becomes negative.
Despite these clear provisions, international pressure—driven by the IMF—seeks to shift the state’s responsibility for the losses, proposing a plan that involves writing off banks’ capital and imposing most of the burden on depositors, compensating each depositor with no more than 75 million Lebanese pounds.
In practice, this would mean liquidating existing banks and creating new ones with no obligations toward old deposits.
A major dispute also persists over $16.5 billion that the Central Bank claims from the government—funds the Ministry of Finance had used to meet debt obligations and Eurobond payments, recorded as temporary debt before later denying responsibility after the exchange rate collapse.
Meanwhile, talk continues about a retroactive audit going back to 2017, conducted without clear standards—potentially paving the way for further justification to erase deposits, all while banks and depositors remain excluded from negotiations to close the financial gap.
In this context, crucial questions arise:
- Who will repay deposits if existing banks are dissolved and replaced with new ones?
- Will the new banks bear this cost?
- How will relationships with international correspondent banks be preserved?
- And who will finance the economy during the recovery phase?
In short, the crisis today is not just a financial gap—it’s a battle over who bears the cost: the state, as required by law… or the depositors, who have been paying the price since 2019?
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