Former Economy Minister Alain Hakim has called for a clear and structured approach to address Lebanon's financial gap and banking sector reform, asserting that accountability for the country's financial crisis cannot be determined until a comprehensive plan is in place.

In an interview with Nidaa Al-Watan newspaper, Hakim emphasized that without a strategy to resolve the financial gap, it would be impossible to assess the solvency of Lebanese banks or their ability to handle financial burdens.

"How can we evaluate the status of banks and their capacity to absorb financial responsibilities without determining how to handle the financial gap?" Hakim asked, pointing to the need for a thorough analysis of Lebanon's financial situation.

The banking reform law, which has been under discussion for months, is a critical element of Lebanon’s efforts to address its financial crisis and meet the conditions set by the International Monetary Fund (IMF). However, the law has been met with significant opposition, especially regarding provisions that would immediately activate the law once approved. According to Hakim, this approach does not take into account the broader context of Lebanon’s financial crisis, particularly the need for a comprehensive solution to the financial gap.

Hakim, who has been closely following the ongoing discussions around banking reform, noted that some banks have already met the required capital adequacy ratios, based on their assets and deposits at the Central Bank of Lebanon. These banks do not face a financial gap. On the other hand, some banks are in surplus, while others are struggling with a financial gap. He stressed that the issue is not merely about solvency ratios but also about liquidity and the necessity of re-evaluating the banks' assets, which he described as an important part of the process.

"The issue is not just about the capital adequacy ratio; it's also about the liquidity available in the banks," Hakim explained. "We need to re-assess the banks' assets, which is a critical part of the solution."

"Before we can hold the banks responsible, we need to clearly define the financial gap and determine how to address it," Hakim stressed.

Moreover, Hakim underscored the importance of linking the two reform laws—the banking sector reform law and the financial gap resolution law. He pointed out that these laws must be enacted together to ensure a comprehensive and sustainable solution to Lebanon's economic and banking crisis.

"The objectives are clear: recapitalize the banks, restructure the public debt, and, most importantly, restore confidence in the banking sector," Hakim said. He also suggested that weaker banks could potentially be merged with stronger institutions or receive international support, such as credit lines from the IMF or the World Bank, or even have their debt converted into equity.

Hakim concluded by warning against the arbitrary handling of Lebanon's banking sector, which he believes could lead to further instability. He expressed concern that such an approach might signal an unofficial attempt to undermine or eliminate the banking sector without a rational and evidence-based plan.

"Arbitrary actions against the banks seem to suggest a move to break or eliminate them, without any scientific basis," Hakim stated. "The solutions are available, and we need to reach an agreement and move forward with a set of reform laws that will reduce risks and restore deposits."