Lebanons Gap Law Aims to Address Ongoing Financial Crisis

Lebanon’s Cabinet Approves Draft Law for Depositor Reimbursement

A draft law has been approved by Lebanon’s cabinet, which could provide depositors with some of their lost funds after six years of the country’s financial crisis. The law, known as the “gap law,” aims to reimburse depositors who deposited up to $100,000 within four years.

Under the law, depositors will receive a reimbursement of $100,000 per account, regardless of the total amount in their accounts. For those with more than $100,000, they will receive $100,000 in cash and the remaining balance will be paid in bonds backed by the Central Bank.

The cabinet has also announced plans for a full financial audit, which will examine the banks’ operations, dividends, bonuses, and other financial practices. The audit aims to identify discrepancies between what the banks claim and what the state reports.

The draft law has been met with criticism from some observers, who argue that it does not go far enough in holding the banks accountable for their role in the crisis. They point out that banks are responsible for paying only 40% of withdrawals under the current law, despite their significant involvement in engineering the financial crisis.

The state is expected to bear most of the burden for the financial collapse, with estimates suggesting a gap of $70 billion between what is owed to depositors and what can be paid out by the Lebanese financial system. Critics argue that the banks should pay more, as they are responsible for managing the funds and benefiting from them.

The draft law will now head to parliament for debate before being signed into law by the prime minister and president.

Source: Al Jazeera