Five years ago, the financial crisis caused the banking sector and exchange rate regime in Lebanon to collapse which dragged with it the whole Lebanese Economy. The crash marked by the Eurobonds default and the subsequent insolvency of major banks has resulted in US$ 72 billion of losses, or 83% of USD deposits at banks, according to the World Bank. The banking sector’s losses as a share of GDP, which is more than three times the GDP, is among the largest worldwide. As the country struggles with the economy’s contraction, currency devaluation, banking sector crash, and widespread poverty, the need for a comprehensive, effective and immediate banking restructuring plan has become indispensable. In response to this crisis, the Council of Ministers in coordination with the Central Bank has proposed a new Financial and Banking Sector Restructuring Plan (FRP). This plan aims to start the repayment process to depositors, despite the fact that repayment ratios depend on many factors, and to stabilize the financial system and restore confidence in it.
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Financial and Banking Sector Restructuring Plan – Analysis & Critique