Every financial crisis raises a central question: who should bear the losses?
In a liberal economy grounded in responsibility, the answer is clear: those who decided, spent, borrowed, and ultimately failed. The Gap Law, however, offers a radically opposite answer. It methodically organizes the erasure of the Lebanese state’s responsibility and transfers the cost of decades of failed public policies onto banks—and above all, onto depositors.
A Public Crisis, Not a Private One
The very explanatory grounds of the Gap Law acknowledge that Lebanon is facing a systemic crisis born of successive monetary and fiscal policies, the collapse of the national currency, and sovereign default. This admission is crucial: it establishes that the origin of the crisis is neither banking nor contractual, but public.
The state accumulated chronic deficits, financed unsustainable subsidies, artificially maintained an untenable exchange rate, squandered billions in the electricity sector, and ultimately defaulted on its debt. These choices stem exclusively from public decision-making.
By all economic and legal logic, these losses should be borne by those who created them. Yet the Gap Law takes the opposite path.
Article 113: A Legal Obligation Turned into an Option
One of the most serious aspects of the law lies in its sidelining of Article 113 of the Monetary and Credit Law. This article is unambiguous: when Banque du Liban incurs losses, they must be covered by the public treasury.
This is neither a theoretical principle nor a political option. It is a binding legal obligation, designed precisely to prevent central bank losses from being transferred to the banking system or to depositors.
The Gap Law empties this obligation of its substance. It turns a clear legal duty into a mere possibility, conditional on considerations of “debt sustainability.” In other words, the state grants itself the right to disregard the law when compliance becomes politically or fiscally inconvenient.
For a state claiming to reform itself, the message is disastrous: the law applies when it suits and vanishes when it costs.
The State’s Debt to Banque du Liban: An Organized Fiction
Another major sleight of hand concerns the treatment of the state’s debt to Banque du Liban. This massive, well-documented debt stems from the direct and indirect financing of public deficits and lies at the heart of the current financial imbalance.
Rather than fully acknowledging this debt and assuming its cost, the Gap Law transforms it into an abstract accounting entry—renegotiable, spread over time, and stripped of real economic value. Its very existence becomes conditional on a political assessment of the state’s “capacity” to pay.
In practice, this means the state recognizes its debt—only if it can afford to.
This approach inverts the core principles of budgetary responsibility. In a liberal system, it is not for the creditor to adapt to the public debtor’s incapacity, but for the state to restructure its spending, priorities, and commitments.
Privatizing Public Losses
By refusing to assume its own losses, the state chooses the most convenient path: transferring them. The Gap Law thus organizes the privatization of public losses.
Banks are ordered to absorb losses beyond their capacity, despite having financed the state within a regulatory framework imposed by public authorities. Depositors, meanwhile, see their savings forcibly mobilized to cover a deficit they neither created nor controlled.
This mechanism violates a fundamental principle of liberal economics: responsibility must be proportional to decision-making power.
Neither banks nor depositors decided the country’s fiscal, monetary, or energy policies.
A State Watching Its Own Bankruptcy
Reading the Gap Law, the state appears as an external actor to the crisis—almost a neutral arbiter. This posture is legally and politically untenable.
The state is not a bystander. It is the main architect of the collapse.
By exempting itself from any direct budgetary contribution, the legislature sets a dangerous precedent: a state that can fail without bearing the consequences while preserving its structures, spending, and privileges.
Such a model is incompatible with any serious reform. No investor, no donor, and no citizen can believe in recovery built on institutionalized irresponsibility.
Reform Without a Responsible State Is an Illusion
Rebuilding Lebanon’s financial system cannot occur without a state that acknowledges its faults, assumes its losses, and reforms its spending. The Gap Law does the exact opposite: it freezes the causes of the crisis while liquidating its consequences onto the private sector.
In reality, this law does not reform the state.
It protects it.
It does not restructure public finances.
It sanctifies them at the expense of savings.
No Durable Solution Without Public Responsibility
The Gap Law fails on a fundamental point: it refuses to name the primary party responsible for the crisis. By erasing the state’s responsibility, it makes any durable solution impossible.
A country is not rebuilt by making its citizens pay for the failures of public power.
It is rebuilt by restoring responsibility, legality, and trust.
Without a responsible state, the Gap Law is not a reform.
It is a renunciation.
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