Banks Resume Dollar Withdrawals at LL3,900

  • Economics
Banks Resume Dollar Withdrawals at LL3,900

Lebanese banks will resume paying their customers with foreign currency accounts at the rate of LL3,900 to dollar after a meeting between President Michel Aoun, BDL Governor Riad Salameh and head of the Shura Council Thursday.

A tweet from the Presidential Office said “as the result of the judicial financial meeting in Baabda, it was decided to consider Circular 151 issued by the Central Bank still in effect, since BDL had not been notified of a valid copy of the preparatory decision of the State Consultative Council to suspend its implementation and submitted a review to the aforementioned council that included new additional elements that were not included.”

Salameh confirmed the decision to resume implementation of Circular 151 and hence the customers with foreign currency accounts will continue to receive LL3,900 for each dollar.

He also told reporters the central bank was not bankrupt and peoples' deposits were safe and would be returned soon.

The Shura Council decision trigged street protests in a number of cities and towns in Lebanon.

But many depositors insist on the getting all their money in fresh dollars, threatening to file lawsuits against BDL and the commercial banks.

Banks claim that they don’t have enough dollar banknotes at their disposal to pay their customers who had foreign accounts before the anti-government protests in Oct. 17, 2019.

Banks in general seemed bewildered and confused by the Shura Council’s decision, insisting that the ball is in BDL’s court, which in turn should issue a new circular to appease the concerns of the depositors.

They all argued that the lenders do not have enough dollar banknotes at the moment to pay their customers in fresh dollars, warning that the council hinted that the lenders can pay the customers at the official rate which is LL1,500 and this means that the client will lose a lot of money.

The central bank's foreign reserves, which have been used to subsidise basic goods such as fuel, medicine and wheat, have dropped from over $30 billion prior to the crisis to around $15 billion in March.

"There is a major banking crisis and none of the perpetrators have been punished, on the contrary they have been allowed whatever they want to do and the perpetrators are the central bank and the commercial banks," said Toufic Gaspard, an economist who has worked as an adviser at the IMF and to a former finance minister.

Political paralysis is complicating the economic meltdown with fractious political leaders unable to agree a new cabinet capable of implementing reforms required to unlock foreign aid.

Lebanon has lacked a government - the current one is acting in a caretaker capacity - since just after a massive blast in Beirut's port last August that wrecked swathes of the capital.

Source: The Daily Star and Reuters