Lebanon’s banking overhaul faces a reported legal setback after L’Orient Today and MTV Lebanon said the Constitutional Council annulled part of an amendment law, as the country pursues reforms the International Monetary Fund (IMF) has made a condition for a staff-level agreement.
The Official Gazette identifies Law No. 71, dated Sept. 10, as an amendment to Law No. 23, which dates to Aug. 14, 2025. Parliament approved the changes Aug. 12, the IMF said, and the gazette listed the law in its Sept. 17 issue.
L’Orient Today reported that the council also removed language in Articles 19 and 27 concerning travel bans and legal immunity for bank employees. The outlet said the decision did not invalidate the law in its entirety. MTV Lebanon separately reported the annulment of Article 3.
The IMF said four measures are needed for a staff-level agreement: the Bank Resolution Law must enter into force; Lebanon must adopt an appropriate Financial Gap Law consistent with international standards; its 2027 budget and medium-term fiscal framework must align with debt sustainability; and it must make progress on public financial management and governance reforms.
A separate draft law on financial stabilization and deposit recovery is central to who bears the cost of the crisis. IMF staff said loss allocation should follow the hierarchy of claims, with shareholders and junior creditors absorbing losses before depositors. The Fund also said repayment plans should be compatible with banks’ viability and public-debt sustainability.
The World Bank estimated Lebanon’s financial-sector losses had topped $70 billion by September 2023. It described depositors as facing severe limits on withdrawals, with smaller account holders particularly affected, and said the financial sector remained insolvent without restructuring and resolution. The estimate is not a final audited total.
The World Bank also put Lebanon’s dollar cash economy at $9.86 billion, or 45.7% of gross domestic product, in 2022. It said widespread cash use can heighten money-laundering risks, informality and tax evasion, while noting that cash activity also includes legal transactions. Before the court ruling, the IMF said it would assess changes arising from constitutional review against international standards.
