Lebanon advances IMF-linked banking reforms to secure aid

By Al Mayadeen English
Source: Agencies
12 Apr 2025 19:13

The United Nations Special Coordinator for Lebanon (UNSCOL) welcomed the cabinet's move, describing it as a signal of commitment to reform and institutional strengthening.

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A retired soldier removes barbed-wire from the top of a concrete wall that set outside the central bank, during a protest demanding better pay and living conditions, in Beirut, Lebanon, Thursday, March 30, 2023 (AP)

Lebanon's cabinet has approved a draft law to restructure the country's banking sector—one of several externally imposed conditions tied to unlocking long-delayed international financial assistance.

The move comes amid growing pressure from Western-backed institutions and donors who have tied economic aid to a political and financial restructuring.

"This is the first time a (Lebanese) government has approved a bill of this kind," said Information Minister Paul Morcos following the cabinet meeting on Saturday.

"This draft law has been, and remains, a demand of both legal experts and international institutions keen on helping Lebanon," he added, in reference to the longstanding reform wishlist of the International Monetary Fund (IMF) and other global financial actors.

The legislation follows the controversial lifting of banking secrecy laws—another key demand of the IMF and Western donors.

Morcos framed these rapid reforms as part of a broader realignment toward international expectations: "In just a few weeks, since adopting the banking secrecy lifting bill, we have accomplished a series of necessary reforms for Lebanon," he said, adding that these steps are "in line with the requirements of the agreement with the IMF."

The United Nations Special Coordinator for Lebanon (UNSCOL) welcomed the cabinet's move, describing it as a signal of commitment to reform and institutional strengthening. "This positive momentum must continue in parliament and of course, later, in practice," UNSCOL posted on X.

A third reform bill, aimed at addressing the country's massive financial deficit, is said to be in the works. "A third step will follow these two measures in the near future: the development of a bill aimed at addressing the financial deficit," Morcos noted.

Sovereignty Undermined

These measures come in the context of a broader economic strategy that observers view as politically selective. Since the crisis began in 2019, the country has faced not only economic collapse—marked by the Lebanese pound losing over 90% of its value and more than 80% of the population falling into poverty—but also a campaign of international pressure aimed at reshaping Lebanon's political order, especially its resistance bloc.

Critics argue that foreign-imposed conditions for aid have deliberately weakened Lebanon's sovereignty, using financial collapse as leverage to curtail the influence of Hezbollah and its allies.

Western sanctions, donor freezes, and aid conditionality have deepened the economic crisis while sidelining any serious reckoning with the root causes of collapse—decades of elite mismanagement, post-war financial engineering, and neoliberal debt cycles backed by the very same international lenders now demanding reform.

Newly appointed central bank governor Karim Souaid, tasked with restoring trust in Lebanon's financial institutions, has pledged to combat money laundering and shield the central bank from political interference.

He and other officials are scheduled to meet IMF representatives during the upcoming World Bank summit in Washington to negotiate terms for a possible funding package.

While the international community insists on "substantial and sustained fiscal reforms" as a condition for aid, many in Lebanon are asking whether these reforms serve economic justice—or merely reinforce a political agenda crafted far beyond the country's borders.