Lebanon’s parliament passed major amendments to its banking secrecy law, marking a crucial step in the country’s efforts to recover from a severe economic crisis that began in 2019. This reform, which allows authorized entities greater access to banking records from the past decade, was a key demand from the International Monetary Fund (IMF) as Lebanon seeks to stabilize its economy and unlock much-needed financial aid.
Key features of the new law
Access to banking records
The amendments grant regulatory bodies, including independent auditors and the central bank, the authority to access banking information without needing to specify a particular objective. This change is expected to enhance transparency and accountability within the banking sector.
Retroactive application
The law applies retroactively for ten years, meaning it can cover transactions and accounts dating back to the onset of the economic crisis. This provision aims to facilitate investigations into past financial misconduct and corruption.
Parliamentary support
The law was passed with significant support, receiving 87 votes in the 128-seat parliament. This reflects a growing consensus on the need for reform among Lebanese lawmakers.
Government commitment
Prime Minister Nawaf Salam emphasized that this reform is essential for restoring depositor rights and rebuilding trust among citizens and international stakeholders. He noted that the previous culture of financial opacity had become a liability rather than an asset for investment.
Economic turmoil since 2019
Lebanon’s economy has been in turmoil since 2019, largely due to years of mismanagement and corruption by the ruling elite. The financial collapse has left many citizens unable to access their savings, leading to widespread poverty and social unrest. The IMF has been in discussions with Lebanon since 2022 regarding a funding program, but progress has been slow due to the government’s failure to implement necessary reforms.
The recent amendments are further part of a broader strategy to address the financial crisis, which includes plans for restructuring the banking sector and addressing the significant financial gap that has emerged. Finance Minister Yassine Jaber, who is currently in Washington for meetings with the IMF and World Bank, expressed optimism that these reforms would facilitate ongoing negotiations for financial assistance.
Read more: Lebanon: World Bank approves $250 million loan with plans to increase to $400 million
Restoring confidence in the banking system
Moreover, the passage of the banking secrecy law amendments is seen as a pivotal moment for Lebanon. By increasing transparency and allowing for greater scrutiny of financial activities, the government hopes to combat corruption and restore confidence in the banking system. According to analysts, this reform is expected to pave the way for additional measures aimed at stabilizing the economy and attracting foreign investment.
World Bank approves $250 million loan for Lebanon
Earlier this week, the World Bank has approved a $250 million loan for Lebanon to address ongoing power cuts, according to the finance ministry. Lebanon has long faced fuel shortages and infrastructure issues. Finance Minister Yassine Jaber announced plans to increase the loan to $400 million for reconstruction after meeting with World Bank Vice President Osama Weden.
In March, the World Bank also presented a $1 billion reconstruction package that included the initial loan. Jaber noted that the loans would have a repayment period of up to 50 years and detailed allocations: $250 million for electricity, $256 million for water, $200 million for agriculture, and $200 million for social affairs.
While in Washington, Jaber met with IMF Managing Director Kristalina Georgieva and emphasized the government’s commitment to essential reforms, stating, “We are doing them because we need them.”
Furthermore, Deputy U.S. Special Envoy Morgan Ortagus reinforced the need for reform to strengthen the state and revitalize the country.
