Lebanon Recovery plan Includes Central Bank Debt Write-Off, Haircuts to Depositors

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Lebanon's government foresees cancelling "a large part" of the Central Bank's foreign currency obligations to commercial banks and dissolving non-viable banks by November, according to a financial recovery plan passed by the cabinet on Friday, Reuters reported. The document, seen by Reuters and verified as accurate by a minister, was passed by cabinet in its final session hours before losing decision-making powers, following the election of a new parliament on May 15. It includes several measures that are prerequisites to unlock funds from a preliminary deal with the International Monetary Fund agreed in April that could help pull the country out of a three-year financial meltdown. The plan foresees a full audit of the Central Bank's forex financial standing by July. Then, the government "will cancel, at the outset, a large part of the Central Bank's foreign currency obligations to banks in order to reduce the deficit in BDL's capital," the document said. Read more.