---
title: "Financial Regularity and Preventing a Repeat of the Catastrophe | Ghazi Mahmoud"
url: https://ghazimahmoud.com/en/articles/2026-01-14-923a19/
lang: en
description: "Six years after the unprecedented financial and economic collapse witnessed by Lebanon, which deprived the Lebanese of their deposits, the Lebanese government approved the \"Financial Regularity Bill\" and deposit recovery, also known as the financial gap and loss distribution bill."
---

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# Financial Regularity and Preventing a Repeat of the Catastrophe

[Brig. Gen. (Ret.) Dr. Ghazi Mahmoud](https://ghazimahmoud.com/en/about/)

14 Jan 2026 · 5 min read

[Banking and money](https://ghazimahmoud.com/en/articles/money/)[The Lebanese economy](https://ghazimahmoud.com/en/articles/leb/)

Six years after the unprecedented financial and economic collapse witnessed by Lebanon, which deprived the Lebanese of their deposits, the Lebanese government approved the "Financial Regularity Bill" and deposit recovery, also known as the financial gap and loss distribution bill. It comes in the context of attempts to relaunch the path of financial and economic recovery, and to restructure and reorganize the banking sector. It also comes in response to the conditions set by the international community and financial institutions, foremost among them the International Monetary Fund, demanding financial reform.

Financial regularity means reformulating financial relations among economic actors in accordance with legal foundations and the principle of transparency, starting from the state, particularly the Ministry of Finance, and Banque du Liban, passing through the banking sector and reaching depositors. This is to ensure a fair distribution of losses and lay the groundwork for restoring confidence in the banking sector, paving the way for the recovery of its pivotal role in financing the national economy.

However, approving the Financial Regularity Bill in the absence of a comprehensive and declared economic vision allows doubts to grow over the launch of a viable recovery path, at a time when the banking sector is still reeling and unable to regain the confidence of the Lebanese or secure financing for the economy through either personal or investment loans, given that resolving the deposit crisis is supposed to coincide with revitalizing the economic cycle and stimulating investment.

Notably, experts estimate the cost of the announced solution to range between $7 billion and $9 billion, compared with reserves at Banque du Liban worth $11 billion and assets at commercial banks ranging between $3 billion and $4 billion. Yet the priority for these assets, whatever the actual cost of returning deposits may be, must go to financing the national economy, whose revival contributes to repaying deposits.

The bill, which aims to allow depositors to gradually recover their deposits trapped in banks, comes as one of the most controversial draft laws because of its direct repercussions on depositors' rights, the state's role in addressing accumulated losses, and the restructuring of the banking system. The government's approval of the bill followed three lengthy sessions of debate, despite the objection of nine ministers to its provisions and sharp divergence and controversy over its clauses among the various political forces.

Conversely, defenders of the bill argue that the absence of a law regulating the distribution of losses on general and fair grounds leads to continuing to pass them indirectly onto depositors, making legislation necessary to protect what remains of their rights. Supporters of the bill also stress that any fair distribution must begin with a contribution from the state through its assets and the reform of its public finances, and a contribution from the banks through their capital and shareholders' equity, before touching deposits.

For his part, Banque du Liban Governor Karim Souaid expressed reservations about the bill, considering that the proposed four-year period to repay the $100,000 tranche of deposits is "somewhat ambitious" and "needs further clarification and strengthening regarding the state's obligations." Meanwhile, the Association of Banks in Lebanon rejected the bill over the lack of accuracy and clarity in the figures it contains, its failure to take into account banks' actual capacity to meet their obligations toward depositors, and its allowance for the state to evade repaying its debts owed to Banque du Liban.

The issue of loss distribution constitutes the core point of contention in the bill, as depositors refuse to bear any part of the losses on the grounds that responsibility lies with the banks, which chased exceptional profits without prudent risk management, the central bank, which pursued high-risk policies and reckless financial engineering, and the state, which accumulated deficits over years in public budgets. The International Monetary Fund, meanwhile, insists that Banque du Liban and commercial banks, and then depositors, bear the largest burden of the financial gap, estimated at around $71 billion.

By contrast, the bill approved by the government rests on an approach that places no direct burdens on the state, instead shifting the largest share of the losses onto Banque du Liban, commercial banks, and depositors. Under the bill, Banque du Liban is to finance 60% of deposit repayment entitlements, while commercial banks pay the remaining share of entitlements, requiring those banks to recapitalize in order to meet them.

The Association of Banks in Lebanon rejected this, demanding the liquidation of "no less than $10 billion" of Banque du Liban's assets, which would help reduce the cost borne by banks under the bill. At the same time, the bill reaffirmed the provisions of Law 42/1986 (prohibiting the sale of gold), so as to prevent gold reserves from being touched or disposed of, and set the minimum monthly repayment of entitlements at 1,500 US dollars to prevent stalling on repayments by banks.

In light of the above, it is clear that addressing the deposit crisis and closing the financial gap cannot be confined to passing a technical legislative text aimed solely at achieving financial regularity and recovering deposits, but requires adopting an integrated political and economic course based on implementing genuine structural reforms in public administrations, particularly their digitization, and strengthening accountability and oversight mechanisms. Such a course also requires formulating a future vision for Lebanon's regional economic role that identifies available opportunities in light of its actual capabilities.

Between returning depositors' funds, ensuring the stability of the financial system, and rebuilding confidence, the fundamental challenge remains drafting a fair and transparent law that prevents impunity and stops the weakest groups from being made to bear the cost of the collapse. The success of this bill is measured not only by the fairness of its distribution of losses, but by how much it contributes to laying the proper foundations for building a state of law and institutions capable of preventing a repeat of the catastrophe.

Translated from Arabic with AI. [Read it in Arabic](https://ghazimahmoud.com/articles/2026-01-14-923a19/)

## Published in

- [Channel 23](https://ch23.com/Article/325761/الانتظام-المالي-ومنع-تكرار-الكارثة)
- [MTV Lebanon](https://www.mtv.com.lb/news/1643715)
- [OZ Arab Media](https://ozarab.media/الانتظام-المالي-ومنع-تكرار-الكارثة/)
- [Lebanon Files](https://www.lebanonfiles.com/2026/articles/باقلامهم/الانتظام-المالي-ومنع-تكرار-الكارثة/)

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[22 Oct 2025 · Between Lebanon and the International Monetary Fund: Postponed Negotiations and Incomplete Reforms · Channel 23, Lebanon Files ](https://ghazimahmoud.com/en/articles/2025-10-22-b7a259/)