Years of Waiting: Can Salam’s Government Finally Deliver Justice to Lebanon’s Bank Victims?

Since 2019, Lebanese depositors have been waiting to recover their funds trapped in the banking system, even gradually, through laws that could be part of any financial reform plan by the new government led by Nawaf Salam.

The depositors’ file has been passed from one government to another, as a final solution requires an executive authority capable of implementing a comprehensive plan to return the funds.

The Depositors' Law

The story of Lebanese depositors’ funds began in 2019, when the country suffered a financial collapse considered by the World Bank to be among the worst economic crises in modern history. The Lebanese lira lost over 98% of its value.

As confidence in the banking system collapsed, banks imposed severe restrictions on dollar withdrawals and international transfers, effectively freezing depositors’ funds.

Since then, dollar withdrawals have been capped based on account size. Even those with accounts exceeding one million dollars could access, at best, $1,000 per week—others much less. At one point, some clients were receiving only $50 a week, before those limits dropped further and foreign currency largely disappeared from banks altogether.

These conditions drove depositors to protest under the slogan: “We want our money at any cost.”

With Nawaf Salam forming a new government on November 8, 2025—one seen as meeting high standards suited to Lebanon’s political and economic challenges—depositors have renewed hopes for a solution.

Finance Minister Yassine Jaber says a new law is being drafted to return deposits to their owners.

Speaking at a press conference in Beirut on May 23, 2025, Jaber described the deposits law as “the most difficult” and said efforts are underway to organize its framework and phases.

He explained that deposits cannot be returned in one lump sum, but will instead be repaid in stages. The first phase will cover amounts up to $100,000, followed by two additional stages.

Jaber noted that Central Bank Governor Karim Saeed is working on procedures to organize this law.

During his inauguration in April 2025, Saeed outlined a roadmap for his term, beginning with a gradual repayment of all deposits. He emphasized that the responsibility will be shared by the Central Bank, commercial banks, and the state, with priority given to small and mid-level depositors.

While Lebanon’s Central Bank governor holds broad powers under the Monetary and Credit Law and related financial regulations, he alone cannot resolve the depositors' crisis.

Despite assurances from the new government, tackling the deposit crisis remains a complex legal battle.

‘Political Bargaining’

Lebanese academic and economist Taleb Saad argues the deposit crisis is, at its core, a financial issue—though one that has been steadily politicised. While moves are being made to legislate a path for returning funds, the crisis is also being wielded as a tool for political manoeuvring.

With parliamentary elections scheduled for mid-2026, political forces are expected to seize on the depositors' issue as a populist tool to attract voters.

“Before even passing a deposit recovery law, there are critical questions about the availability of funds to repay any portion of what’s owed to citizens,” he told Al-Estiklal.

“What financial mechanisms do the banks have to repay depositors? What plans are in place to secure those funds?”

Saad said no clear answers have been given, especially since the finance minister mentioned that repayments may not be in cash, but rather via credit cards or purchase options, meaning people would only be able to use their money within certain limits.

“All political parties in Lebanon have a vested interest in passing a law that enables the return of bank deposits, as restoring banking activity and trust is essential for rebuilding confidence among citizens, international bodies, and credit rating agencies,” he added.

Saad stressed that Lebanon has already embarked on several reforms, particularly in the financial and banking sectors, which cannot advance without beginning to release part of the frozen deposits.

He called for a clear roadmap for depositors, investors, private sector stakeholders, and bondholders, clarifying the fate of their dollar-denominated deposits within a specific timeframe.

Notably, the frozen funds are not limited to Lebanese citizens. Depositors include people of various Arab and foreign nationalities.

In August 2022, Jordanian MPs submitted an official request urging their government to act swiftly to recover around $1.2 billion in Jordanian deposits held in Lebanese banks, belonging to individuals and institutions.

Iraq, too, has seen recurring debate about the fate of its deposits in Lebanon, with officials and experts estimating the total to be around $10 billion.

In November 2020, the former head of the Syrian regime Bashar al-Assad accused Lebanese banks of contributing to Syria’s economic collapse, claiming that Syrians held between $20 billion and $40 billion in deposits there.

Lebanon’s Stalled Reforms

On February 21, 2025, Lebanese MP Farid Boustany introduced a draft law aimed at protecting foreign currency deposits trapped in Lebanese banks and reviving the country’s paralyzed financial and banking sectors.

At a press conference, Boustany highlighted that several initiatives under the governments of Hassan Diab and Najib Mikati had attempted to return depositors’ funds, only to be withdrawn later. “After shelving the McKinsey plan and failing to act on previous proposals, this bill is an attempt to give the state a real chance to rebuild the Central Bank’s capital and reignite the economic engine,” he said.

The legislation explicitly guarantees depositors’ rights, banning any cancellation, haircut, or forced conversion of deposits into bank shares.

As Lebanon continues to struggle with worsening economic conditions, the long-forgotten McKinsey plan has resurfaced as a possible recovery roadmap. Commissioned in 2017 and submitted in 2018 by the U.S.-based consultancy McKinsey & Company, the strategy laid out a five-year plan for economic growth. But lacking political will, it was quickly shelved and left to gather dust.

Lebanese banking and financial expert Nicolas Chikhani, who co-authored the proposed law with Boustany, emphasized that the bill reflects a serious effort to confront the crisis—first by protecting deposits, then by working toward their return.

Chikhani outlined three key principles embedded in the draft: no to the cancellation of remaining deposits, no to the elimination of accrued interest, and no to converting deposits into bank shares. He argued that the proposed legislation could help restore order in the banking sector and align with a broader recovery framework expected to be embraced by the new government. Taken together, these steps could also help Lebanon exit the Financial Action Task Force (FATF)’s grey list.

In 2022, local media, including MTV, reported that the government was weighing a plan to write off $60 billion of deposits held by banks at the Central Bank—out of a total of $80 billion. These funds belonged to individual depositors. The plan was ultimately scrapped, largely due to fears over its social and economic impact, and concerns that it would further erode public trust in the financial system.

In October 2024, Lebanon was officially added to the FATF’s grey list—a designation for countries under special monitoring due to failures in countering money laundering and financial crimes.

Facing growing pressure, the newly formed Lebanese government—sworn in March 2025—has pledged to address the conditions that led to the grey-listing. Justice Minister Adel Nassar has formed a legal committee tasked with implementing FATF-recommended reforms. The committee is expected to present its report within 45 days.

At the same time, Parliament has approved key amendments to Lebanon’s banking secrecy law, making it easier for regulatory authorities to access account data—a critical demand of the International Monetary Fund (IMF). Prime Minister Salam described the step as vital “to uncover the truth” behind the financial collapse that began in 2019.

Lebanese authorities insist they remain committed to tackling the fallout from the country’s ongoing economic disaster, now entering its sixth year. But experts warn that substantial international support will only come if Lebanon undertakes deep structural reforms and brings its banking system into full compliance with global standards.

For decades, Lebanon’s strict banking secrecy laws helped attract foreign deposits and powered the growth of its financial sector. But today, protecting depositors’ rights requires major legal reform, a full-scale restructuring of the banking sector, and a plan to close the massive financial gap at the core of the crisis—all while suspicion lingers that Lebanon’s banking elites exploited the meltdown to launder money, shift wealth abroad, and shield themselves from consequences, as ordinary citizens were locked out of their savings.

Though Parliament passed a first round of banking secrecy reforms in 2022, the IMF deemed them inadequate, noting that they did not allow authorities to lift secrecy on suspicious accounts or identify the individuals involved.

The government now claims that the updated law is retroactive for ten years, allowing for scrutiny of financial transactions that occurred around the time the crisis began.

The international community continues to pressure Lebanon to implement long-overdue reforms as a condition for unlocking billions of dollars in aid—funds that are essential to rebuilding a devastated economy battered by years of corruption, dysfunction, and mismanagement.