Lebanon’s government is working on a draft law aimed at restructuring frozen bank deposits and establishing a mechanism for their recovery after years of uncertainty, according to a leaked copy obtained by sources cited by Annahar. The legislation, known as the Financial Gap Law, would classify deposits, redefine the obligations of banks and the state, and create new asset-backed financial certificates for depositors, marking an unprecedented step in Lebanon’s post-crisis financial reform.

The draft law goes beyond technical regulation of trapped funds, seeking to balance three competing priorities: depositors’ demands to recover their funds in U.S. dollars, the financial capacity of banks and the state, and the need to curb the country’s massive financial gap, which has severely strained the Lebanese economy. However, the law also proposes a “clean-up” of liabilities, excluding funds of unknown origin, excessive interest, suspicious transfers, and even purchases of official dollars after October 2019. This means some deposits may not be recognized in full or may be recalculated at reduced value.

Under the draft, deposits of up to $100,000 per account would be paid in cash over four years. Amounts above this threshold would be converted into long-term financial certificates issued by the central bank, with modest 2% annual interest, backed by central bank assets and future revenues. Cash payouts for smaller amounts would be funded through the National Deposit Guarantee Institution in partnership with banks and the central bank.

The law would apply to all deposits in Lebanese banks before October 17, 2019, while excluding foreign bank branches, which operate under separate contracts. For depositors with multiple accounts, all funds would be aggregated and treated as a single deposit. Joint accounts would be divided according to agreement, or equally if no agreement exists.

Deposits above the guaranteed $100,000 limit would be structured as follows:

• Medium deposits ($100,000–$1 million): $100,000 paid in cash over four years; remaining balance converted into Category A certificates.

• Large deposits ($1–5 million): $100,000 paid in cash over four years; remainder converted into Category B certificates.

• Very large deposits (over $5 million): $100,000 paid in cash over four years; remainder converted into Category C certificates.

All certificates would carry a 2% non-compounded annual interest and be fully backed by central bank assets, including gold reserves.

The draft law also allows for government flexibility. Cabinet decrees could increase payments or accelerate repayments depending on economic conditions.