Lebanon’s new government and the central bank are devising a plan for commercial banks to pay billions in locked deposits to bank customers.

Wasim Al-Mansouri, the central bank’s acting governor, on Tuesday told the Saudi Arabian daily Aleqtisadiah that a solution would not be possible without the presence of an executive authority capable of drawing up a comprehensive plan to return funds to depositors within a “reasonable period of time”.

“The partial solutions the central bank is offering for specific periods of time cannot replace reform laws which can be enacted between the government and parliament,” Al-Mansouri said, referring to monthly small sums paid by banks to depositors under the supervision of central bank Banque Du Liban.

“This (deposits) file has been delayed for a long time, but the new government will concentrate on this file and the central bank will work along with the government and the parliament to devise the necessary plan to resolve the deposit problem,” he said.

Lebanon’s deposit problem began in late 2019 when the worst financial crisis in the country’s modern history erupted following massive street protests.

The crisis triggered panic withdrawals of deposits, prompting banks to freeze withdrawals and lock up the deposits of their clients.

Citing Banque du Liban data, Lebanon’s Almodon news website estimated that deposits with Lebanon’s banks stood at around $90 billion in June 2024, including nearly $69 billion resident deposits and the rest are non-resident deposits.

The report showed deposits before the crisis exceeded $169 billion, adding that the decline came after banks paid large sums to depositors before the freeze.

“The decline was also due to the collapse of the Lebanese pound (lira) against the US dollar. This has led to a sharp fall in the value of lira deposits. This means there was a 47 percent drop in the total deposits with banks after the crisis,” the report said.

The International Monetary Fund has signed a rescue deal with Lebanon but stipulated its implementation hinges on economic and banking reforms and the creation of a body to tackle widespread corruption, which is blamed for the crisis along with other factors.

Al-Mansouri said he was optimistic following the election of President Joseph Aoun and the appointment of prime minister Nawaf Salam.

“This is a very positive development as it means the revival of constitutional establishments. But I believe that confronting challenges facing the central bank in the next period depends on the ability of the next government to implement reforms.”