Finance Minister Yassine Jaber did not mince words: “The banks will be the first losers” if the Financial Gap Law is enacted. And if the banks lose, depositors inevitably lose too. The draft law places the full burden of repaying deposits on the banks alone — a move that would inevitably destroy the Lebanese banking sector and wipe out depositors’ money.
Why? Because the law is built on a fatal flaw: it protects the state and the Central Bank while sacrificing depositors. The draft ensures the state contributes nothing, and that the Central Bank’s assets remain untouched — shifting the entire weight of losses onto commercial banks. Thus, the result would be catastrophic: the collapse of every Lebanese bank and the destruction of depositors’ funds.
The mechanism is even more alarming. It would drain banks of their liquidity and capital, leaving ordinary depositors to absorb even heavier losses. The Central Bank, for its part, plans to tap into the banks’ compulsory reserves, estimated at $8.5 to $9 billion, to cover its share, which in reality means using depositors’ own money against them.
The numbers are staggering. Lebanon’s financial gap is estimated at $83.4 billion. The latest draft law attempts to reduce this figure through a series of write‑offs: $34.35 billion in so‑called “illicit funds” and unidentified accounts; $10 billion in accrued interest; $15 billion in deposits converted from lira to dollars at the outdated rate of 1,500 LBP/USD after October 2019. Together, these deductions amount to nearly $59.35 billion. Yet even after these write‑offs, the shortfall remains enormous — leaving a remaining gap of about $50 billion.
Under the proposal, each depositor would recover the first $100,000 of their funds over five years, paid in four annual installments. The rest would be tied up in long-term debt instruments. The plan’s cost is pegged at $22 billion, with banks expected to shoulder $12 billion, despite having only $3.5 to $4 billion in liquid assets, plus $8.5 to $9 billion in Eurobonds whose fate remains uncertain.
The state, meanwhile, refuses to meaningfully contribute. Its acknowledged debt of $16.5 billion will not be repaid. Talk of “perpetual loans with negligible interest” is nothing more than a disguised write-off.
So how can the Finance Minister claim that 85% of deposits will be repaid, and the remaining 15% settled annually? Where will the money come from?
From a state that refuses, to this day, to cover its share, the largest share of all?
From the Central Bank, whose only available funds are the banks’ reserves, i.e depositors’ money? From banks that hold barely $4 billion in cash, their entire liquidity?
Is this really how the law intends to “return” people’s money by bankrupting the banks and wiping out deposits?
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