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Judicial and Monetary Signals “Revitalize” Recovery Approaches in Lebanon

Financial and monetary decision centers in Lebanon are witnessing significant movement at the governmental and administrative levels, which is believed to lead to the creation of a renewed road map to emerge from the cycle of crises and their outcomes in line with needs. The IMF must conclude a final agreement supported by a financing program of not less than $3 billion by responding to the conditions of structural reforms required.

According to the exclusive information of Asharq Al-Awsad, the qualitative change is indicated by the need to introduce fundamental and non-secondary amendments to ensure the revival of the recent government plan, which includes a set of legislative and administrative proposals on the topic of restructuring banks. , due to the positive assessment of the effectiveness of the new monetary policies, the possibility of using it to correct the course of public finances received a strong impetus. Activities of banks in the areas of money management and financing.

New approaches to banking reform

A senior banking official notes that there has been a fundamental shift in the government’s approach to reforming banks’ assets and liabilities, away from “write-off” programs that only severely harm the savings of Lebanese and non-Lebanese depositors. , residents and non-citizens, but rather the “constitution”, representing a completely indefensible departure from its diversity and flexibility. Systemic crises, and persistence in delaying recovery plans.

In fact, the president of the International Union of Arab Bankers, Dr. Joseph Tarabai, sees the beginning of many positive steps to correct the course, the most important of which for depositors and investors is the State Shura Council, which is the highest. The Administrative Judiciary in Lebanon issued a historic decision compelling the Lebanese government to cover the central bank’s losses, as well as not write off its bank deposits, in accordance with Article 113 of the Monetary and Credit Law. It also asserted that the government’s abrogation of these obligations conflicts with laws and constitutions that protect private property and international treaties that protect investment.

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Tarabai: A decisive signal for the future of investment

Tarabai believes that the judiciary’s determination to recognize the state’s responsibility for the losses of the central bank and banks’ deposits is a decisive sign of Lebanon’s future viability. An established legal system, which protects the right of investors to their money, lays a good foundation for a real revival, which protects deposits, protects the banking sector and prevents deregulation of the country’s money economy. , which could lead to a downgrade of Lebanon’s anti-money-laundering status, exposing it to international sanctions and isolation from the global banking system.

In fact, the management of the central bank, according to relevant sources and follow-ups, creates a new classification of outstanding deposits in the banking system, acknowledges the rights owed to all depositors and undertakes the necessary verification measures to separate them. A clear and consistent plan for the relationship, i.e. with the consent of the depositor and the bank, through cash or investment means, to contribute to the acceleration of the situation, legal funding from the suspect.

On the other hand, it is also expected to develop a gradual mechanism for the recovery of credit and financial activity, which is a pillar of banking operations and a necessary condition for reforming budgets and rebalancing their items in terms of both assets and liabilities. By clear law that any new loans must be repaid in the same currency the customer requests, specifically in cash dollars.

A solution to the problem of debt repayment

In parallel, the banks wanted to conduct an impartial audit of all existing debt repayments during the crisis, especially the dollar-backed commercial loans at 1,500 liras to the dollar, which caused a huge gap between assets and liabilities. Depositors lost the value of investment and income received by banks for the benefit of the private sector, including individuals and corporations, which was about $50 billion before the crisis, now down to $7 billion. , offset by restrictions to the tune of about $90 billion in favor of depositors.

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Banks emphasize the priority of restoring credit circulation based on the equation that progress begins with economic growth, which can only be achieved by strengthening credit, especially to the private sector, as it is the main engine of the economic wheel. Loans are initiated by depositing money into banks, which then organize a lending mechanism based on the currency of the loan.

Additionally, despite the digital and reform gaps, the Ministry of Finance is seeking to make further progress in the area of ​​fiscal reforms after recording significant success in getting the current year’s budget legislation on time within the constitutional deadline. The Finance and Budget Committee is responsible for preparing the legislation before it is enacted by the General Assembly at the beginning of the fiscal year.

Budget 2025

In a new commitment to the work calendar for annual budget preparations, Finance Minister Youssef Al-Khalil asked relevant ministries and departments to start preparing the draft budget for 2025. A reform approach,” after two check budgets, clear guidelines for improving investment spending that restores the economic cycle.

The circular also includes the general framework for preparing the budget, and one of its most important provisions is the setting of expenditure ceilings within the limits of the current year’s budget allocation, in light of the expectation that revenues will be affected by unstable security conditions. , and the importance of not arranging any deficits that threaten fiscal and monetary stability, the Ministry is discussing the technical details of the proposed budget scenario with donors’ representatives.

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According to the Finance Minister, careful scrutiny is needed to avoid misleading, discretionary and depositors’ rights to decide on bank withdrawals and set a fair price in pounds. Data on the capacities available in the central bank, on the one hand to avoid harming financial and monetary stability and, on the other hand, to ensure the rights of depositors.

The finance minister also believes that restricting deposits until favorable laws are enacted imposes a cost on the economy and the depositor. He will not hesitate to take the appropriate decision in the light of the availability of the necessary data, and once he receives it from the Central Bank, he will present it and discuss it with the government and take measures that will serve the public interest, in this context emphasizing his support to the monetary authorities in the process of harmonizing the exchange rate.

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