BEIRUT (Reuters) – Lebanon’s industrial banks do not need sufficient liquidity to pay again depositors, the secretary common of the nation’s banking affiliation mentioned on Wednesday in a letter that laid out the banks’ positions.

The letter was signed by the Affiliation of the Banks of Lebanon (ABL)’s Fadi Khalaf and served because the introduction to the ABL’s month-to-month report. Khalaf mentioned it represented his “opinion and private evaluation”.

The letter mentioned industrial banks had roughly $86.6 billion deposited at Lebanon’s Central Financial institution as of mid-February, and a internet damaging place with correspondent banks of $204 million as of Jan. 31, 2023.

“These numbers present unquestionably that the banks haven’t any liquidity,” Khalaf wrote.

Lebanon has been within the throes of a monetary meltdown that has value the native foreign money greater than 98% of its worth and pushed greater than 80% of the inhabitants beneath the poverty line.

The disaster erupted in 2019, following a long time of corrupt authorities, profligate spending and monetary mismanagement, and noticed banks impose restrictions on withdrawals and transfers though a capital controls legislation had not been adopted.

That sparked snowballing anger in opposition to the monetary establishments, however the banks say the insurance policies of the state and the Central Financial institution are accountable.

Lebanon’s caretaker deputy prime minister Saade Chami, the architect behind the nation’s stalled restoration roadmap, advised Reuters final 12 months that banks ought to “go first” in absorbing the losses stemming from the monetary sector.

These losses are estimated at round $72 billion.

Lebanon is working to handle the disaster by means of talks with the Worldwide Financial Fund to realize entry to $3 billion that would kickstart the financial system.

However the IMF mentioned final 12 months that Lebanon’s progress in implementing required reforms remained “very sluggish”, with the majority but to be carried out.