| 9 December 2023, Saturday |

Limiting the game: BDL implements new rules for Sayrafa platform

It is expected that the Sayrafa platform will witness a new development in its operational mechanism, represented by the strictness of Lebanon’s Central Bank Governor, Riad Salameh, two weeks before the end of his term, as he has decreed that the platform’s benefits should be limited to one bank account and one bank, regardless of the number of bank accounts held by the individual.

Observers describe this measure as a “revolution in the Sayrafa platform” and a change in the game rules established by the governor since its inception.

The goal is to reduce the number of beneficiaries and the volume of transactions. Can this be achieved? And according to which mechanism? What will be the reaction of speculators who tried to rebel against the governor at the beginning of this year and brought the black market dollar to the limits of 140,000 pounds per dollar?

Banking expert Dr. Ghassan Shamas explains to “Nidaa Al Watan” that there has not yet been an official circular from the Central Bank regarding this direction.

If such a circular is issued, it would be a “significant matter” regarding how it will be enforced and the mechanism to follow.

He points out that depositors can benefit from the platform in multiple banks without disclosing it, mainly since banks do not exchange information about banking transactions.

In that case, it would be up to the Central Bank of Lebanon to verify or monitor the accounts, which is challenging given that 30 banks are allowed to conduct banking operations, and about 1,500 branches receive depositors!

He adds, “If the Central Bank wishes to impose this measure, it is within their right, but they must inform us of the mechanism for its implementation to prevent depositors and companies from benefiting from multiple accounts simultaneously, especially since this measure takes time to complete.

In that case, the depositor would have already submitted their request to a bank and benefited from the service. The other question arises: after it is discovered that they have benefited from multiple accounts, what action will be taken against them? In short, implementing this decision is not logical.”

Shamas believes that if a circular and an implementation mechanism are issued, it means that they want to limit banking operations and the flow of dollars in the market, attempting to prevent the use of dollars coming from the tourist season in the market. This may reflect a slight increase in the price of the black market dollar. Still, the increase will be minimal due to the tourist season and the influx of dollars from it (about $7 billion). The situation would be different if we were not in the summer season when the number of expatriates coming to Lebanon is more significant.

Economic expert, Michel Qazah, explains to “Nidaa Al Watan” that the expected decision indicates a governance transfer from Salameh to his deputy, Wassim Mansouri. This is because the four deputies of the governor do not agree with the current Sayrafa format and consider it a waste of depositors’ money.

He adds, “There is no need for the existence of Sayrafa. Instead, a platform through the Beirut Stock Exchange should provide exchange rates transparently based on supply and demand.

The Central Bank intervenes to control the exchange rate in case of speculation.” He considers that “the current Sayrafa is a platform for money laundering and speculation. Therefore, the governor’s deputies believe this performance wastes depositors’ money, benefiting brokers, bankers, and politicians.

If they decide to keep it, its operations should be limited to companies that import oil, food, and medicines, and it should be done without cash dollars but by replacing Lebanese pounds with dollars for transfers. Any surplus beyond these companies should be transferred to other companies.”

Qazah expects that the black market dollar rate will rise in the early period after the issuance of this circular. However, the abandonment of Sayrafa will gradually take place to allow the market to readjust itself, especially since there are approximately 112 trillion Lebanese pounds in the Lebanese market.

Theoretically, this amount of pounds is equivalent to $1.2 billion, and the Central Bank of Lebanon controls the exchange rate in case of speculation. He also notes that the First Deputy Governor and the other deputies are known for their good reputations and would not accept committing mistakes that would harm their personal and professional reputations. Therefore, the abandonment of Sayrafa will occur gradually.

Qazah believes that there is no problem with the exchange rate fluctuation, as it is done in countries like Egypt and Turkey.

However, they also take measures to prevent the outflow of hard currency abroad, which happens in Lebanon.

The government is completely unaware of this issue, and there are billions of dollars leaving Lebanon, for example, to foreign labor. There are other unrecorded amounts as well.

In conclusion, Qazah states that measures can be taken to reduce imports, which have yet to happen, especially in luxury and high-priced items seen on Beirut’s streets.

  • LBCI