BEIRUT — Lebanon’s parliament on Tuesday night approved some amendments to a bank secrecy law that was a key request from the International Monetary Fund before it agreed to a bailout package amid the country’s economic crisis.
Despite the changes, legal advocacy groups say the changes to the law are unlikely to be enough to please the IMF, as they limit moves to lift bank secrecy provisions to judicial authorities. The decades-old law is seen by many as a way to hide the widespread corruption that has driven the tiny nation into bankruptcy over the past three years.
“We have agreed on a law to lift bank secrecy with some amendments where we have greatly increased the number of groups that can request the lifting of bank secrecy,” said the head of the parliamentary finance and security committee. budget, Ibrahim Kanaan, in a tweet. “Negotiations with the International Monetary Fund have not stopped, and we have been in constant communication over the past few days and hours so that there are no loopholes in the agreement that Lebanon aspires to.”
Among the amendments is the power to lift bank secrecy of accounts retroactively to 1988. Kanaan told local TV channel Al-Jadeed that some proposed amendments in line with IMF criticism were voted out of the legislation during Tuesday’s session. .
Since Lebanon’s economic slide began in late 2019, three quarters of the population of 6 million people, including 1 million Syrian refugees, have been plunged into poverty. The Lebanese pound has lost more than 90% of its value. The international community has demanded major reforms in order to help the nation plagued by corruption.
Talks between the Lebanese government and the IMF began in May 2020 and resulted in a services-level agreement in April.
The Lebanese government has implemented some of the IMF requirements of the agreement, which are mandatory before finalizing a rescue package. Among them are the restructuring of the ailing Lebanese financial sector, the implementation of tax reforms, the restructuring of external public debt and the establishment of strong anti-corruption and anti-money laundering measures.
Lebanon defaulted in March 2020 to repay its huge debt, worth at the time around $90 billion, or 170% of GDP, making it one of the highest in the world.
A key IMF request in an agreement in principle with cash-strapped Lebanon for a bailout was to allow the country’s tax authority to lift bank secrecy. The request was rejected by parliament’s finance committee, saying it threatened privacy by allowing some officials to view bank accounts without an order from the judiciary.
The IMF said in September that previous amendments were not enough to improve the law to meet international standards and best practices.
Nizar Saghieh, an activist lawyer and co-founder of the Lebanese watchdog group Legal Agenda, told The Associated Press that the amended law did not address all of the IMF’s concerns, despite some “small steps” forward.
“It’s obviously better than what we had in the past, which was very bad because we basically had total bank secrecy, but it doesn’t reach the standards we need,” he said. “It’s not up to what we need to respond to a crisis of this magnitude.”
A previous draft approved by parliament in late July did not lift bank secrecy in general and only limited certain government institutions to lifting it when investigating crimes. President Michel Aoun refused to sign the draft and sent it back to parliament for amendments.