Supporters of Lebanon’s IMF-backed banking sector reforms face media war

Fierce backlash is mounting in Lebanon against IMF-sponsored banking sector reforms, with civil society groups, independent media, and reformist policymakers allegedly being targeted in what the IMF says is a coordinated campaign that would undermine progress on financial and political changes, the Financial Times writes. The alleged smear campaign — reportedly promulgated by some in the banking sector, according to media watchdog Samir Kassir Foundation head Ayman Mhanna — is the result of mounting pressure on the newly formed Lebanese government to enact long-delayed reforms aimed at restructuring the banking sector and unlocking an IMF rescue package.

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What’s behind the backlash? The IMF’s conditions — which include lifting banking secrecy, restructuring the financial system, and addressing more than USD 70 bn in post-crisis losses since 2019 — would force banks and their political allies to disclose sensitive financial data and shoulder a portion of the losses.

Despite the coordinated pressure, the Lebanese parliament was able to amend the country’s banking secrecy law to allow broader access to historical financial records. Prime Minister Nawaf Salam hailed the move as a “necessary step towards the desired economic reform” and essential to “holding perpetrators accountable.” The law allows authorities to access records going back up to a decade — a clause that some legacy interests have strongly opposed.

More battles ahead: A draft banking sector restructuring law has been approved by the cabinet and is now under discussion in parliament’s finance committee, though legislation on how to distribute financial losses — and how to repay depositors — has yet to be agreed. The secretary-general of the Association of Banks in Lebanon said the sector wants “a realistic balance between financial reform and the protection of depositors’ rights.”

THE CLOSING BELL-

The EGX30 rose 0.7% at yesterday’s close on turnover of EGP 4.1 bn (8.2% below the 90-day average). Local investors were the sole net buyers. The index is up 8.8% YTD.

In the green: Qalaa Holdings (+4.9%), Palm Hills Development (+4.6%), and Orascom Development (+3.3%).

In the red: Credit Agricole (-1.8%), ADIB (-1.6%), and Eipico (-0.9%).

CORPORATE ACTIONS-

Shariah-compliant leasing company AT Lease wrapped up its EGP 441.3 mn capital increase with a 98.6% coverage rate, it said in an EGX disclosure (pdf). The EGX-listed company sought to increase its issued capital to EGP 1.0 bn from EGP 558.7 mn.