Lebanon should sell part of its vast gold reserves to revive its crippled financial sector and repay billions in frozen deposits, a global finance body has said.

The proposal is part of a five-year rescue strategy devised by the Washington-based Institute of International Finance for the crisis-hit Arab nation, which is reeling under the worst economic crisis in its modern history.

The IIF represents about 400 members, including major banks, investors and central banks across 60 countries.

Its seven-point plan, prepared by the institute’s chief economist Garbis Iradian and yet to be published, calls for the sale of $12 billion in gold reserves and the return of nearly $80 billion in frozen bank deposits.

“The plan is designed to restore liquidity, rebuild trust in the banking system, and stimulate economic activity without triggering inflation or depleting foreign reserves,” Iradian told AGBI in an interview.

“It is grounded in seven interlocking pillars that together form a coherent, sovereign-led roadmap for financial stabilisation and inclusive recovery.”

Lebanon holds the second-largest gold reserves in the Arab world after Saudi Arabia, estimated at 287 tonnes, the world’s 21st-largest reserve at the start of 2025. The country has been reluctant to sell part of its holdings and a sale would need approval by parliament in line with the constitution, which says gold wealth is a “major factor of confidence and economic stability”.

Former acting central bank governor Wassim Mansouri revealed in April that Lebanon had rejected an offer by some American banks to invest a third of its gold reserves that are stored in the US.

Iradian said Lebanon controls about $38 billion in gold reserves at current prices, equivalent to 110 percent of its GDP, the highest gold-to-GDP ratio globally.

He said the plan proposes monetising one-third of these reserves to provide immediate liquidity for deposit restitution. 

An additional $16 billion in gold could be collateralised to generate a sustainable 5 percent annual return, Iradian said, adding that such recurring income would support future obligations and policy priorities, while preserving most of the gold stock.

The plan is not without its critics.

“I have said before that selling part of our gold reserves is not the real solution,” said Maroun Al-Khouli, head of Lebanon’s federation of labour unions. “We should recover part of the huge funds siphoned out in the aftermath of the crisis and carry out comprehensive and radical restructuring of the banking sector.”

The IIF’s Iradian revealed that the plan also envisages the introduction of a new banknote – set at 100,000 old pounds per unit – the recovery of an estimated $9 billion in illicit capital outflows since 2019, privatisation of state-owned assets and the issuance of $9 billion in “Diaspora Eurobonds” in 2027-2030 to mobilise patriotic savings and reinforce Lebanon’s external position.

Lebanon’s economy and trade minister Amer Bisat said at the International Monetary Fund annual meeting in Washington last week that Beirut is edging closer to securing a long-awaited programme to revive its economy but major hurdles remain and the process will be lengthy.

An IMF official acknowledged last month that Lebanon managed to boost its international reserves and logged a small fiscal surplus this year after authorities implemented tight fiscal and monetary policy.

But Ernesto Ramirez Rigo, the country’s IMF mission chief, was otherwise critical of the pace of reforms in Lebanon and called the 2026 budget insufficiently ambitious, saying: “Overall, spending decisions need to be consistent with available financing.”