The Banking Executive Magazine - February 2026 Issue 2

Lebanon Fiscal Gap Law Decoded could provide proof records of loss distribution and deposit reimburse- ments, helping rebuild trust in the fi- nancial system. Data analytics and Artificial Intelligence AI tools will be essential for conducting bank-by- bank viability assessments, stress testing institutions, and monitoring compliance with the law’s require- ments. On the regulatory side, cen- tralized financial management systems integrated with the Banque du Liban will allow real-time over- sight of liquidity, while cybersecurity frameworks will protect sensitive de- positor data. Finally, digital reporting dashboards accessible to parliament, the IMF, and civil society can en- hance transparency, ensuring stake- holders can monitor progress toward the government’s pledge of recover- ing up to 85% of deposits within four years. IMPACT ON LEBANON E ECONOMIC GROWTH The impact of Lebanon’s Fiscal Gap Law of 2025 on economic growth could be significant if effectively en- forced, as it provides a framework to acknowledge and distribute the country’s massive financial losses, re- store confidence in the banking sys- tem, and unlock crucial IMF support and international aid. By pledging to recover up to 85% of deposits within four years, the law has the potential to revive consumer trust, stimulate spending, and encourage invest- ment, which are essential drivers of growth. Moreover, restructuring banks and strengthening financial governance could stabilize the mon- etary system, reduce inflationary pressures, and deliver sustainable re- covery. However, the law’s success depends on transparent implementa- tion and political consensus. How- ever, the law promises may remain symbolic, leaving Lebanon’s econ- omy vulnerable to stagnation and further decline. GLOBAL IMPACT The global impact of Lebanon’s Fis- cal Gap Law of 2025 lies in its po- tential to serve as a precedent for how deeply indebted and crisis- stricken economies manage systemic financial losses, with international institutions like the IMF closely mon- itoring its enforcement as a condition for aid. By formally acknowledging and attempting to distribute $70 bil- lion in losses, the law signals to global markets and investors that Lebanon is willing to confront its fi- nancial collapse, which could im- prove confidence in emerging economies facing similar debt crises. Successful implementation would strengthen Lebanon’s credibility, at- tract foreign investment, and rein- force the IMF’s role as a stabilizing force in global finance, while failure could undermine trust in interna- tional rescue frameworks and high- light the risks of political fragmentation in managing eco- nomic recovery. ISSUE 206 FEBRUARY 2026 the BANKING EXECUTIVE 13