Lebanon Resumes IMF Bailout Talks as Banking Reform Deadlock Persists

BEIRUT — Lebanon commenced a new round of negotiations with the International Monetary Fund on Tuesday, seeking a bailout package to resolve a protracted economic collapse widely regarded as the worst in the nation’s modern history. The talks, scheduled to run through Friday, are aimed at securing a preliminary agreement, according to Finance Minister Yassine Jaber.

Progress remains hostage to the country’s failure to enact critical banking legislation. A staff-level agreement reached in April 2022 stipulated several preconditions for unlocking assistance, chief among them a “financial gap law” to mandate the distribution of losses across the state, the central bank, commercial banks, and depositors. Parliament has yet to vote on the measure.

At a press briefing, Jaber identified the loss-distribution framework as the primary obstacle. Although the cabinet submitted a draft law to parliament in 2025, the text faces staunch opposition from the banking sector and political factions, preventing its passage. Disputes over the valuation of losses—estimated at roughly $70 billion in 2022 and believed to have grown since—and the mechanism for allocating them have stalled the IMF process for years.

“Lebanon cannot continue with a cash economy and without an effective banking sector,” Jaber stated. “The only solution is for the gap law currently in parliament to be passed… and for us to begin reforming the banking sector.”

While legislators have approved banking secrecy reforms and a bank restructuring law—two other IMF prerequisites—the core issue of loss allocation remains unresolved. The crisis has frozen savers out of their deposits, eroded confidence in financial institutions, and accelerated a shift toward a cash-based economy.

Compounding the structural challenges, the World Bank projected in August that the Lebanese economy would contract by 6.4 percent this year. The forecast cites the impact of two consecutive conflicts between Israel and Iran-backed Hezbollah since 2023, which have derailed nascent recovery efforts.

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