BEIRUT (Reuters) – The Association of Banks in Lebanon said on Saturday it “totally rejects” the government’s latest draft financial recovery plan intended to pull the country out of economic collapse.

In a statement shared with Reuters, the ABL called the plan “disastrous” and said it would leave banks and depositors to bear the “major part” of the losses.

The government estimates financial sector losses at $72 billion.

“The ABL has instructed its legal advisers to examine and present a series of legal measures that will allow the preservation and recovery of the rights of banks and depositors,” the association said.

Lebanese banks have been a major lender to the government for decades, helping fund a wasteful and corrupt state that descended into financial collapse in 2019.

The collapse resulted in the exclusion of depositors from their savings and the loss of the local currency by more than 90% of its value. The banking association rejected an earlier version of the plan in February, saying it would lead to a loss of confidence in the financial sector.

ABL approval is not required for the government to start implementing a plan, but experts say support from the banking sector could help resolve the crisis.

The current draft outlines a series of financial reforms, including an overhaul of the banking sector and caps on how much depositors could get back into their accounts.

Earlier this month, Lebanon signed a staff-level agreement with the International Monetary Fund for a 46-month extended financing facility, under which Lebanon requested access to the equivalent of approximately $3 billion.

But access to these funds depends on the adoption of a series of economic reforms and a restructuring of the financial sector.

(Reporting by Maya GebeilyEditing by Mark Heinrich and Christina Fincher)