financial expert Marwan Kheireddine says a brand-new drafted law that proposes regulating and restructuring the banks is a necessary step in the right direction
Ever since 2019, Lebanese banks have been crippled by corruption and unsustainable fiscal policies. Now financial expert Marwan Kheireddine says a brand-new drafted law that proposes regulating and restructuring the banks is a necessary step in the right direction — whether the International Monetary Fund requested it or not.
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Marwan Kheireddine’s comments to Al Jadeed TV
The proposed law will determine “which banks require a capital increase and the amount needed and those that are viable to continue their business activities,” Marwan Kheireddine told Al Jadeed TV. “In my opinion, it shall pave the way for restoring the public’s trust in the Lebanese banking sector after it was unfortunately compromised for three years.”
Restoring that peace of mind is something the Lebanese former professor says won’t happen overnight.
ABC News reports that Lebanon’s parliament has approved amendments to a banking secrecy law that has the support of the IMF. Since 2019, the Lebanese pound lost 90% of its worth and plunged the Lebanese people into poverty.
Transparency and a restoration of trust are two key factors Kheireddine says must occur for the Lebanese economy to get back on track. “This trust must be regained, gradually, by applying an IMF program and enforcing the right financial laws sooner rather than later,” he warns.
Marwan Kheireddine says he’s hopeful it will mend the damage done to the Lebanese economy during the past three years.
“Transparency pays,” he advises.
The business leader cautioned that while many are targeting banks, it’s the Lebanese state that should be held accountable.
“Banks are certainly partially responsible for what has happened in the country; however, the state has the lion’s share of the responsibility,” the AM Bank chairman told Al Jadeed TV.
Meanwhile, he says the bank restructuring draft law will basically define which banks are equipped to persist. “Some banks have more exposure to government debt than others,” he told Al Jadeed TV.“The state is the biggest client for banks,” he adds.
While Marwan Kheireddine says the Lebanese state has taken out legal loans, he finds it unfair that the government is trying to repay its debts at the exchange rate of LBP 1,500 (approximately $1). He adds that he believes it will create a situation where banks wouldn’t be able to survive. As a banking industry leader, he’s also strongly opposed to any scenario that would devalue citizens’ bank deposits.
When the Lebanese government defaulted in the spring of 2020, Marwan Kheireddine says there was an announcement they would start negotiations with treasury bill holders to settle the debts, but those negotiations appear to have been halted. Marwan Kheireddine says without a clear-cut financial plan in place, it will be challenging to resolve the chaotic circumstances.
As Lebanon continues to power through what he calls “the worst economic meltdown in any country since the Second World War,” he believes maintaining an optimistic outlook is essential for the Lebanese people.
In conjunction with the Lebanese government, the drafted law was authored by financial leaders from the Central Bank in Lebanon, the Banking Control Commission of Lebanon and experts from the IMF.