Lebanon's commercial banks have warned they lack sufficient liquidity to repay depositors under a government recovery plan, an adviser to the lenders said. The proposal aimed to address an $80 billion gap in the financial system, but banks say they cannot meet repayment obligations without additional funding.

This liquidity shortfall complicates negotiations to revive Lebanon's economy after years of crisis. The country's banking sector has been crippled by capital controls, currency devaluation, and political instability since 2019. Depositors have been unable to access their savings, while banks struggle with mounting bad loans and shrinking foreign reserves.

The warning from bank advisers signals deepening challenges for Lebanon's economic recovery. Without a viable solution to restore bank liquidity, the country risks prolonged financial paralysis. International creditors and the IMF have tied any bailout to comprehensive banking sector reforms, making the liquidity crisis a critical obstacle to securing external support.