After listing Lebanon on Financial Action Task Force (FATF) Grey list last year, the European Union added Lebanon to the Euro “Restricted” List on August 5th, 2025. This measure is not surprising noting that the financial crisis escalated six years ago without any substantial procedures taken by Lebanese authorities to solve the issue. This measure will increase the financial burdens on Lebanese citizens. First, Lebanese opening accounts and doing transactions in Euro currency will be subject to additional audit and restrictions. Second, the imports from European countries will be subject to some delay and higher costs. Therefore, this will weigh more on Lebanese citizens through possible increase in prices due to the fact that a significant part of Lebanese imports (around 30% of 2023 imports and around 25% of 2024 imports) are from countries that use the Euro as an official currency.
Mr. Abdul Hafiz Mansour, Special Investigation Commission Chairman, stated to Annahar newspaper that this is an expected measure after listing Lebanon on FATF Grey list. He added that this will not affect the relationship with European countries, and UAE is an example where it was previously listed on this list and the transactions in Euro did not stop. However, Dr. Pierre El Khoury, economic expert, revealed through Annahar that this will have a significant impact on the financial sector. He added that this will have negative consequences on foreign direct investments as these investments need stable banking environment with no restrictions on foreign currencies. Moreover, Mr. El Khoury stated that this might affect remittances in Euro currency from expats negatively, as it might decrease by around 10% – 15% due to its increased costs and restrictions.
In conclusion, although the new government started implementing several reforms to adjust the economic and financial situation, but there are so many reforms needed to be implemented to return foreign confidence in Lebanon. The reason is that it inherited so many problems from previous governments. We hope that this government continues its reforms but at a faster pace, if possible, and especially those related to the financial sector that is the cornerstone of economic growth.