Financial gap law (Lebanon)

The Financial gap law (Arabic: قانون الفجوة المالية) refers to the draft law that was presented and approved om 27 December 2025, addressing Lebanon's ongoing banking crisis that began in the 2019 liquidity meltdown. The law will regulate a gap of about $80–83 billion between the money people have in banks and the money banks actually have. It also explains how depositors might get some of their money back. The proposal was sent to Parliament by Prime Minister Nawaf Salam's government, and it has caused debate about whether it is fair to small depositors and whether it follows the reforms requested by the IMF.

The financial crisis started in Lebanon in 2019 after the government failed to pay its debts, the currency lost most of its value, and banks became insolvent. More than $100 billion in bank deposits were frozen. Banks allowed people to withdraw money only in Lebanese pounds at very low exchange rates, or small amounts of dollars under special rules like Circulars 158 and 166.^[1][2][3]

After elected and establishing a new government, led by president Joseph Aoun and prime minister Nawaf Salam, began pushing reforms faster during 2025.^[4][5] These included changes to banking secrecy laws and a preliminary agreement with the IMF.^[6][7] The new law brought to parliament, officially admits that there are large financial losses and focuses on an $80 billion "financial gap" caused by government borrowing from the central bank and banks taking too much risk.^[3][8][9]

In mid-December 2025, Lebanon's government released a draft law to deal with the financial gap and how frozen bank deposits would be repaid. This law is the first official attempt by Parliament to face the deep problems behind Lebanon's banking crisis.^[9][10]

The law aims to give a legal framework for returning deposits after years of informal limits on withdrawals. It provides a clear way to decide how losses will be shared between depositors, banks, and the government. It also follows the rules set by international organizations, especially the IMF, as part of larger talks on financial help and stabilizing the economy.^[11]

Key elements of the draft law include:

Over a period of about four years depositors with balances under US$100,000 would receive scheduled cash payments. Larger depositors would be compensated primarily through tradable, long-term asset backed securities issued by Banque du Liban, with maturities ranging from 10 to 20 years depending on deposit size.^[9][10][8]

These tools are meant to be supported by income and profits from central bank assets. This includes valuable items like gold and any money made from selling assets.^[9][10]

An independent international audit firm must be chosen after the law is passed. It will review the central bank's assets within a set time to find out how big the financial gap is and what the debts are.^[9][10]

According to the draft law, commercial banks would help pay back some of the money, for example, by covering part of the refunds for small depositors. The central bank and the government would take on most of the responsibility for paying back medium and large deposits. This was reported by Reuters.^[10][8]

A tax may be charged on some large money transfers sent abroad before the crisis, unless the money is brought back to Lebanon within a set time after the law is passed.^[10][8]

The money that Lebanon owes to the central bank could be turned into long term bonds. These bonds would be agreed upon by the Finance Ministry and the Banque du Liban.^[10][8]

The draft law was approved by vote, that was 13 in favor vs. 9 against. the law is now in Parliament review and approval.^[12][13]

The new law must be approved by both the government and the Lebanese Parliament. As of December 2025 there is a heated debate and disagreements among political parties, banks, and civil society groups. The Association of Banks in Lebanon has openly criticized some parts of the law, saying banks and the government might not be able to meet the obligations it creates.^[10]

The law also builds on other major financial reforms passed in 2025, including changes to banking secrecy rules that increased oversight and access to financial records, and new rules for restructuring banks to help authorities deal with failing banks.^[14][8]

The opposition in the Lebanese government, that includes the Lebanese Forces (LF), Hezbollah and Amal Movement dissent and Parliament Speaker Nabih Berri, presented a united front against the new law. According to their stance, the law won't really solve the banking crisis in Lebanon and erase deposits rather than save them.^[15][16][17]

Banks and industry groups, led by the Association of Banks in Lebanon, are against the proposed law because they believe it could harm the banking sector. They say the plan is based on exaggerated loss figures, which could weaken banks even more. They also warn that without clear data for each bank, the law could cause instability or lead some banks to fail. In addition, they argue that rules like banning the use of gold reserves limit ways to repay debts and make it harder to deal with the crisis.^[18]

Lebanon's Financial Gap Law received support mainly came from the government and state institutions. It was supported by Prime Minister Nawaf Salam, Finance Minister Yassin Jaber, and most Cabinet ministers, who saw it as an important step to deal with banking losses, manage the return of depositors' money, and meet IMF reform demands. President Joseph Aoun and the central bank leadership also supported the law, believing it is necessary for financial recovery and for restoring economic stability and trust from the international community, even though they admit the law is controversial and not perfect.^[19][20][21]

• 2025 Lebanese bank reformation
• Economy of Lebanon
• Beirut One Conference