The Banking Executive Magazine - February 2026 Issue 2

INTRODUCTION Lebanon’s Fiscal Gap Law of 2025 is a draft reform bill introduced by Prime Minister Nawaf Salam to ad- dress the country’s massive financial losses, estimated at around $70 bil- lion, by distributing them among the state, the central bank, commercial banks, and depositors. The law is considered essential for unlocking International Monetary Fund (IMF) support and international aid, as it formally acknowledges the scale of the crisis and sets a framework for re- covery, including a pledge to return up to 85% of deposits within four years. However, it has sparked fierce controversy, with banks disputing the government’s figures and warning that the plan could destabilize the fi- nancial system, while depositors fear they will bear disproportionate losses, making its passage in parlia- ment a critical and contentious test for Lebanon’s economic future. This article presents an overview of Lebanon’s Fiscal Gap Law of 2025 covering the key points: timeframe and milestones, challenges and op- portunities, impact at local and global levels, enforcement, stake- holders, technologies needed and role of banks. The article concludes with strategies for banks to comply, future outlook, and best practices to learn. TIME FRAME AND MILESTONES The Lebanon Fiscal Gap Law (2025) was approved by the cabinet in De- cember 2025 and sent to parliament for debate. The government pledged that, once enacted, the law would enable recovery of up to 85% of de- posits within four years (2026–2030). The timeline includes cabinet ap- proval, parliamentary debate and amendments in early 2026, IMF ne- gotiations tied to the law’s passage, and phased depositor recovery mile- stones through 2030. The Fiscal Gap Law’s official timeline begins with cabinet approval in late 2025, moves to parliamentary de- bate in 2026, and sets a four years horizon for depositor recovery through 2030. Its success hinges on political consensus, IMF support, and the government’s ability to imple- ment reforms. Lebanon Fiscal Gap Law Decoded ISSUE 206 FEBRUARY 2026 the BANKING EXECUTIVE 9