IMF presses Lebanon to improve banking reforms

The International Monetary Fund urged Lebanon on Friday to strengthen its banking resolution law as the country seeks to secure funding.

Lebanese MPs last month approved a banking resolution law that would establish a framework to restructure the sector. The law, first approved by the Lebanese government in May, is seen as a crucial step towards addressing the country's financial crisis.

The Lebanese pound has lost more than 90 per cent of its value since the economy plunged into crisis in 2019, leaving depositors struggling to access their savings. Lebanon's poverty rate has more than tripled over the past decade to 44 per cent.

The bank resolution law is seen as a key step towards meeting IMF standards to secure a new economic programme.

Lebanon reached a staff-level agreement with the IMF in 2022 that would give the country access to roughly $3 billion in funding, but Beirut's government at the time failed to achieve the reforms required to unlock it.

However, the IMF said the bank resolution law “needs further refinement”.

“The IMF team has suggested amendments to fully align it with international standards and ensure the effectiveness of bank restructuring processes,” Ernesto Ramirez Rigo. the IMF mission chief to Lebanon, said after a staff visit to Beirut from September 22-25.

The multilateral lender also urged Lebanon to consider tax reforms to spend on reconstruction and social protection.

“The IMF team expected a more ambitious approach to the 2026 government budget than in the draft approved by the Cabinet,” Mr Rigo said.

The fund has said Lebanon requires a combination of fiscal discipline and financing to help address the its economic crisis. The IMF has also said Lebanon would need additional financing from the broader international community.

The IMF said it looked forward to continuing discussions with Beirut, including during the 2025 Annual Meetings next month.