The Financial Gap: From Writing Off Deposits to Writing Off Accountability

The Lebanese Pound and the Dollar (Sites).

Professor Maroun Khater

Writer and Researcher in Financial and Economic Affairs

In addition to its complex political crisis, Lebanon is witnessing widespread and deep controversy sparked by a leak that cannot be separated from the political and financial context of the "Financial Gap" draft law.

The leak, which appears intentional not only in its timing but also in its content, came at a moment when disagreement still persists over the actual size of the gap. The obstacle is not only the complexity of the numbers but also that agreeing on a unified figure necessarily means agreeing on assigning responsibilities and moving from crisis management logic to crisis resolution logic, which does not seem available yet. The existing disparity between the estimates of the state, the Central Bank of Lebanon, and the banks does not reflect an innocent technical difference but clearly reveals the absence of political will to move towards a solution based on accountability and structural reform. In this context, it must be recalled that reports from the International Monetary Fund and the World Bank have repeatedly emphasized that unifying the figures is a mandatory condition for any serious recovery plan. The numbers are not a negotiable technical detail but the natural entry point for a fair distribution of losses and for determining who erred, who benefited, and who was negligent.

More dangerous is the increasing push to rush the approval of the Financial Gap law, as if it were an ordinary law or an appendix to the accounting budget laws that Lebanon is used to passing under time and necessity pressure. However, the Financial Gap law is neither temporary nor technically limited in impact; it is a law with a foundational strategic dimension that shapes the future of the financial and banking system for decades, determines the fate of deposits, redefines the relationship between the state, the citizen, and the bank, and between the banking system and investors, as well as reshaping the state's role in building the economy. Rushing its approval without transparent public discussion, without unified figures, and without clear responsibility assignment poses a grave danger because it may entrench permanent injustice under the guise of a quick solution. Foundational laws are not measured by the speed of their approval but by their resilience, fairness, and ability to address the root causes of the crisis rather than just its outcomes.

Resorting to leaking approaches that practically operate on the principle of "God forgives what has passed" at the expense of depositors and deposits, and on the ruins of the current banking sector, not only harms economic justice but also harms the current administration and clearly contradicts the oath speech and the ministerial statement that emphasized restoring the state and protecting depositors' rights. Lebanon's crisis is not the result of a "natural disaster" but an unprecedented systemic crisis resulting from wrong fiscal and monetary policies, structural state failure, and high-risk banking practices that were overlooked for many years. Therefore, holding banks alone fully responsible is a misleading simplification, and absolving them is a grave mistake. The entire system participated in producing the collapse, and every pillar of it, without exception, is required to bear its fair share of the losses.

The absence of accountability is the core flaw in the leaked approach, which makes assigning losses to the weakest link inevitable, regardless of which party is said to bear them. In the absence of accountability, the matter is no longer about fair loss distribution but an organized transfer of losses to those unable to object. If the state bears the losses, the reality will translate into additional taxes, chronic inflation, and deterioration in public services, all borne exclusively by the law-abiding citizen. If the banks bear the losses, the practical result, in the absence of recapitalization and accountability, will be passing those losses directly or covertly onto depositors. In both cases, the result is the same: losses borne by the innocent.

The circulating leaks reveal that the draft law being worked on does not only redistribute losses unfairly but will cause a complete write-off of deposits without any exception. The proposed approach suspiciously ignores deposits in Lebanese pounds while on the other hand assigning losses to the state on paper and then freeing it from them by issuing debt securities that lack trust and value at issuance. Simultaneously, the leaked draft places the real part of the losses solely on the banks, which are indeed partners in the crisis but not its sole cause, potentially leading to their bankruptcy or insolvency through the bank reform law, which would have been better named the "Bank Bankruptcy Law." This inevitably leads to eliminating any future ability to repay or gradually recover deposits. Thus, the proposed draft is not a recovery plan but a comprehensive deposit write-off plan under misleading technical titles and far from any serious accountability of those responsible for the collapse. This approach is nothing but an organized escape from accountability, granting the perpetrators in the state and financial system a new acquittal and opening the door to reproducing the same system with new tools and different faces.

Destroying the existing banking sector and pushing it towards total bankruptcy is akin to reviving the infamous "Five Banks" plan. These approaches are a dangerous gamble that will inevitably lead to a new financial gap and the reproduction of the same clientelism and corruption that brought Lebanon to collapse, in addition to exposing the economy and banking sector to the risk of sanctions. International experiences, as shown by the IMF, confirm that bank restructuring must be done through continuity, recapitalization, and sound governance, not through total destruction and erasing banking memory. In a related context, we emphasize that eliminating the current banks practically means erasing banking databases, which are a fundamental pillar for any economic recovery and any restoration of confidence. As for talk of banking alternatives in the absence of foreign and Arab banks, it remains a legitimate doubt, as it opens the door to models that may carry special financial or political agendas, threatening the sovereignty of financial decision-making. The fundamental question remains: who will invest in a country whose system is not yet fixed? Unfortunately, the answer is worrying, if not frightening!

The financial gap is not only a gap in numbers but a gap in trust, justice, responsibility, and sovereign decision-making! An approach to such a significant file should not be rushed but naturally be a foundation for the future, economic recovery, and restoring confidence. This requires the conjunction of accountability and reform under sustainable political stability...

Reform without accountability is an illusion, and accountability without reform is revenge! As for writing off deposits under any name, it is a flagrant crime.

In conclusion, either a state that holds accountable and reforms, or a new gap added to Lebanon's many gaps, indeed a wound added to its open wounds in a time we hope for healing and the return of hope...