Lebanon adopts economic recovery plan amid financial meltdown

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IANS | 21 May, 2022
The Lebanese government has adopted an economic recovery plan aimed at saving the country from a three-year financial meltdown, according to a statement by the council of ministers.

Several measures in the plan are what the International Monetary Fund has required for its bailout, such as restructuring the banking sector and reforming a banking secrecy law, reports Xinhua news agency.

According to the new plan, "a large part" of the Lebanese central bank's foreign currency obligations to commercial banks will be cancelled and non-viable banks should be dissolved by November.

The largest 14 commercial banks in Lebanon, representing 83 per cent of the country's total assets, will be audited, and viable banks recapitalized with "significant contributions" from bank shareholders and large depositors.

Prime Minister Najib Mikati said the plan will protect small depositors "to the maximum extent possible" in each viable bank.

A similar plan endorsed by the government of then Prime Minister Gassan Diab in April 2020 was rejected by Lebanon's Association of the Banks as it would leave banks and depositors bearing a loss estimated by the government at about $72 billion.

The incumbent government led by Mikati will become a caretaker as of Saturday because a new Parliament was elected on May 17 and a newly elected speaker, together with the president, will nominate a new prime minister.

Lebanon has been suffering an unprecedented financial crisis amid lack of US dollars, leading to the currency to lose more than 90 per cent of its value since 2019, while also plunging over 70 per cent of the population into poverty.