--- title: "Lebanese Deposits Between Promises and Solutions | Ghazi Mahmoud" url: https://ghazimahmoud.com/en/articles/2025-08-27-bd105c/ lang: en description: "Since the autumn of 2019, Lebanon has been experiencing one of its most difficult and complex financial and economic crises, after the banking sector collapsed and depositors' confidence in it collapsed along with it, due to strict restrictions on their deposits, estimated at more than $90 billion, as well as on transfers and withdrawals." --- [All articles](https://ghazimahmoud.com/en/articles/) # Lebanese Deposits Between Promises and Solutions [Brig. Gen. (Ret.) Dr. Ghazi Mahmoud](https://ghazimahmoud.com/en/about/) 27 Aug 2025 · 5 min read [Banking and money](https://ghazimahmoud.com/en/articles/money/) Since the autumn of 2019, Lebanon has been experiencing one of its most difficult and complex financial and economic crises, after the banking sector collapsed and depositors' confidence in it collapsed along with it, due to strict restrictions on their deposits, estimated at more than $90 billion, as well as on transfers and withdrawals. The Lebanese thus found themselves facing an unprecedented reality: life savings had become "numbers on paper," and banks that had once been a symbol of financial stability turned into a source of constant anxiety, after withdrawals were restricted to low ceilings and subjected to multiple exchange rates. The crisis worsened in the absence of a clear fiscal policy and the reluctance of successive governments to take responsibility, particularly regarding restructuring the banking sector, determining the size of the losses and distributing them fairly, and adopting a clear and transparent recovery plan, despite domestic demands and international pressure. This made the issue of deposits the most prominent headline of any economic or reform debate, turned it into a symbol of the political and economic establishment's failure to protect citizens' rights, and made it a national cause par excellence. At a time when the current government has no draft of the financial gap bill to submit to the Cabinet for study and approval, informed sources at the central bank indicate that a plan currently being prepared will focus on ways to reduce the size of the "financial gap" to below $50 billion in accordance with legal and fair principles, and after conducting the long-sought audits of bank balance sheets. The plan provides for placing funds of questionable origin into a special category until their legitimacy is proven, and isolating accounts that have been "dormant" for many years, in addition to canceling the high interest rates that used to be paid on deposits and reducing them to internationally recognized levels, as well as accelerating accountability regarding the $20 billion deficit caused by electricity financing and the $11 billion resulting from subsidizing imports of consumer goods. This would not have been possible had Parliament not passed amendments to the Banking Secrecy Law in 2024, allowing supervisory authorities to audit accounts going back up to ten previous years. These amendments were considered an essential step on the path to reform, as they make it possible to uncover violations and hold accountable those responsible for smuggling or manipulating funds. On the other hand, Karim Souaid, who was appointed governor of Banque du Liban at the beginning of 2025, affirms that depositors are not responsible for the collapse of the banking sector, and that the solution requires distributing losses among the government, the central bank, and commercial banks combined, rather than imposing them on individuals who paid the price of the crisis out of their savings. Small depositors whose deposits do not exceed $100,000, and who make up roughly 84% of depositors, will have priority in cash repayment, while various formulas are being proposed to address the deposits of large depositors. As for the ideas proposed to return the deposits of large depositors whose accounts exceed $500,000, according to the recommendation of the Institute of International Finance, they boil down to establishing a Deposit Recovery Fund, financed from state assets or from issuances of long-term bonds. The fund could undertake the gradual return of small amounts, while large amounts would be converted into debt instruments repaid over long periods of time. At first glance, the idea appears to be a "glimmer of hope," yet it raises several concerns: how will the fund actually be financed amid the state's insolvency? Will depositors accept waiting decades to recover their money? And what guarantees are there that the fund's resources will not be squandered as happened in the past? All the more so since linking depositors' rights to a fund that does not yet exist is considered unreliable at the present time. Meanwhile, some sources indicate that a draft law to restructure the financial sector includes preserving around $100,000 in accounts, while anything exceeding that amount would be converted into government bonds or debt instruments. The goal is to break up the massive volume of deposits and distribute it in stages. However, this proposal sparks widespread controversy between depositors, who fear their money will become "numbers on paper," and banks, which fear losses they cannot bear. The result is that the Lebanese depositor remains captive to waiting, living on the hope of one day seeing his savings recover their real value. What is painful is that with every passing day, deposits lose part of their value due to inflation, meaning that even returning the money "nominally" does not necessarily mean recovering its actual value, while plans and laws remain on paper. Depositors are impatiently awaiting any ray of hope, yet they face a harsh reality in which promises clash among Banque du Liban, the government, and the banks. While small depositors wait to recover their deposits in cash and in stages, the issue of large depositors has turned into an arena of political and judicial conflict, amid questions over the fairness of loss distribution. Six years into the crisis, the deposits issue remains suspended between government and banking plans, international conditions, and domestic conflicts, clearly reflecting the depth of the structural crisis at the level of the Lebanese state: the absence of an economic vision, conflicting interests among the ruling powers, and a lack of trust between the state and its citizens. What is clear is that there is no quick or easy solution, and that recovering the funds will require years and perhaps decades, within a comprehensive reform plan in which losses are distributed fairly and transparently. The lost trust between the citizen and the state cannot be restored by promises alone, but rather through tangible steps beginning with returning funds to small depositors, holding those responsible for the collapse accountable, and enforcing transparency in the management of public funds. Without that, the deposits of the Lebanese will remain hostage to politics and vested interests, and the hope of recovering them will remain contingent on an unknown future. Restoring depositors' confidence in banks requires a sincere initiative by these banks, encompassing a comprehensive and clear plan to repay deposits, without exceptions or unjust ceilings, and according to a fair timetable. Because trust is not restored by promises; rather, it is built through actions, and by returning rightful property to its owners. Translated from Arabic with AI. [Read it in Arabic](https://ghazimahmoud.com/articles/2025-08-27-bd105c/) ## Published in - [MTV Lebanon](https://www.mtv.com.lb/news/1606436) - [OZ Arab Media](https://ozarab.media/ودائع-اللبنانيين-بين-الوعود-والحلول/) ## More on banking and money [All articles on this subject](https://ghazimahmoud.com/en/articles/money/) [13 Aug 2025 · Lebanon Between the FATF Grey List and the European Blacklist · Channel 23, Lebanon Files ](https://ghazimahmoud.com/en/articles/2025-08-13-62dae3/) [30 Jul 2025 · Banking Reform Awaits the Financial Gap Law · MTV Lebanon, Channel 23 ](https://ghazimahmoud.com/en/articles/2025-07-30-23b4ba/) [23 Jul 2025 · Banking Sector Reform and Its Stalled Laws · Channel 23, OZ Arab Media ](https://ghazimahmoud.com/en/articles/2025-07-23-551b39/)