| 26 May 2024, Sunday |

Will depositors recover their monies in cash?

After the government failed to keep its commitment to support the road transportation sector, public drivers staged protests and sit-ins today to seek government assistance for their sector, which has been hit hard by the economic downturn.

Dozens of drivers took part in a protest march in Beirut, while others held sit-ins in Tripoli, Nabatiyeh, and other cities.

According to Bassam Tlais, the head of the Federations and Unions of the Land Transport Sector, “the escalatory steps on various Lebanese areas are intended at putting pressure on the government to follow what was agreed upon.”

Following the recent deterioration of the Lebanese pound’s exchange rate, which reached LBP 28,000 per dollar, a meeting was held between the Prime Minister, the Minister of Finance, and the Governor of the Banque du Liban, which concluded that two ambiguous measures were taken to curb the deterioration of the lira’s exchange rate, in line with the random policies that officials used to take as patchwork solutions. The Banque du Liban announced in a circular that it will provide the banks with their cash share for the remainder of this month in cash US dollars instead of the Lebanese pound, at the exchange rate of the daily exchange platform. Banks must pay the full amounts in dollar notes to their customers at the same rate, instead of settling the amounts in Lebanese pounds and resulting from making withdrawals or cash fund operations from the accounts or dues belonging to them according to the approved ceiling for the implementation of these operations with the concerned bank.

According to banking sources, the Central Bank of Lebanon’s circular relates to Circular No. 158, according to which banks pay $400 in cash and $400 in Lebanese pounds at the exchange rate of an exchange platform for customers, as it can grant the Bank of Lebanon, the funds allocated to the part that is paid in pounds, in dollars, provided that the banks sell those dollars to the beneficiaries of Circular 158, at the exchange rate of a platform.

As for the second measure to curb the collapse of the Lebanese pound, for which a circular has not yet been issued, it stipulates that the Banque du Liban regulate the repayment of commercial loans in foreign currencies, in cash in Lebanese pounds, at the exchange rate of 8,000 Lebanese pounds. This measure will target corporate loans only, such as residential and personal loans. Banking sources explained that commercial loans are currently paid through bank checks, that is, in dollars, which are currently sold at about 20 percent of the value of the check in the event that it is purchased in the fresh dollar, or at the exchange rate of approximately 5,500 Lebanese pounds, in the event that it is acquired in LBP. It is worth noting that requiring commercial loan holders to repay these loans in cash in pounds would increase their costs by about 30%, noting that contracts signed between banks and companies require loans to be paid in the same currency, that is, in dollars in cash or through checks, and not in another currency and at an unofficial exchange rate.

The number of daily arrivals at Beirut’s Rafic Hariri International Airport is currently recorded at 7,000 and sometimes surpasses 8,000, despite the fact that the majority of them are Lebanese, just before the holidays. 87,593 people arrived in Lebanon over the first two weeks of this month.

  • Sawt Beirut International