Lebanon banking paralysis deepens economic collapse

Lebanon’s financial crisis remains unresolved in 2026, with the banking system still unable to function normally and depositors continuing to face severe restrictions on access to savings. Reuters reported on August 20, 2026 that the IMF called Lebanon’s bank-law changes a “major step,” but still framed them as part of a larger restructuring package needed to fix vast funding shortfalls and eventually let depositors recover money. Another Reuters report from December 19, 2025 said the government’s draft deposit-recovery plan would repay small depositors under $100,000 in instalments over four years, while larger balances would be converted into long-term securities, underscoring that the crisis is still far from resolved. Recent reforms have advanced but remain incomplete. Parliament passed an amended banking secrecy law in April 2025, giving the Central Bank, the Banking Control Commission, and auditors retroactive access to records for oversight and audit purposes. However, reform trackers and analysis in 2026 still describe the bank-resolution and financial-gap laws as unfinished, with implementation and political consensus still delaying a full recovery framework. The scale of damage remains enormous: an IMF-linked 2025 assessment cited banking-sector losses of about US$73 billion, or roughly 225% of 2024 GDP, while other recent analyses place losses in the US$70–80 billion range. The Lebanese pound has lost about 98% of its value since 2019, deposits remain largely frozen, and households, public employees, pensioners, and businesses continue to rely on cash and informal coping mechanisms.