Fact Checking the Arab Media

On February 12, 2022, the Lebanese minister of economy and commerce, Amin Salam, told Radio Liban that the International Monetary Fund (IMF) “asked us, during the last meeting on Friday, via Zoom, to explore several options since [any reform] plan should not be at the expense of depositors.” He explained further that, “we asked the IMF about the possibility of finding different options in order to prevent the economic recovery plan from falling on the shoulders of the depositors.” (National News Agency; En-Nashra)

The IMF has long expressed its willingness to help Lebanon come up with a comprehensive recovery plan to deal with the financial and economic crisis, one which would include reforms to the state budget, the banking sector, the central bank, as well as structural, political, and fiscal reforms. In early October 2021, the newly installed Najib Mikati cabinet launched talks with the IMF after these talks had come to a halt upon the resignation of the Hassan Diab cabinet in August 2020.

We asked one journalist specialized in economic affairs, Azza Hajj Hassan, who writes economic reports for the Al-Modon website, about the veracity of the minister’s statement that the IMF is asking that depositors' rights must not be harmed. Hajj Hassan said: “There is no IMF document that lays out all the terms to assist Lebanon because the IMF has not produced such a document yet and is still in the phase of discussion and negotiations with the Lebanese team via online session.”

We also asked a high-ranking source, who requested anonymity, on the Lebanese negotiation's delegation with the IMF about this issue. The source said: “There are no IMF terms pertaining exclusively to the depositors and their rights. We are hearing many statements that have no scientific basis such as, ‘the IMF has more compassion for the depositors that the Lebanese state!’ This is not true. The Lebanese government is working with the IMF on preserving the depositors’ rights as much as possible. However, there are limits to preserving these rights. The IMF never imposed this condition but rather laid out some terms that are not seen as impossible and that relate to the state budget, its endorsement in parliament, the restructuring of the banking sector, and the legislation at the parliament.”

The Lebanese negotiator is correct: the IMF “has never imposed” the condition to protect depositors, however, the IMF itself publicly explains that one of its guiding principles - again, not an “imposition” - is indeed to specifically protect “small depositors”: “...Lebanon faces unprecedented challenges, which require implementation of a comprehensive reform plan. This includes… Pursuing a comprehensive restructuring of the financial sector—recognizing upfront the losses at private banks and the central bank, but doing so in a way that protects smaller depositors.” According to the press release by the IMF issued on February 11, i.e. just after it had met with the Lebanese government, our source on the negotiation team and Minister Salam: “There is a clearer understanding of the unprecedented size of the financial sector’s losses that would need to be addressed transparently consistent with the hierarchy of claims while protecting small depositors, as already envisaged by the authorities.”

As such, Minister Salam’s statement that the IMF had “asked” the Lebanese government not to harm depositors is true but misleading. The IMF has publicly asked the Lebanese government not to harm “small depositors” specifically and not depositors in general. Furthermore, although it hasn’t “imposed” this condition, it has laid it out as one of its core principles guiding the negotiations.