The Debate Over circulars 151 and 165: A deep Dive into Lebanon’s Financial Crisis
Lebanon’s financial landscape remains in turmoil,with increasing discussions about the potential repeal of Circular 151 and Circular 165. These measures, issued by the Banque du Liban (BDL), have been pivotal in managing the country’s economic crisis. But what led to their implementation, and what would their repeal mean for Lebanon’s fragile economy?
in an exclusive interview with Lebanon Debate, economic expert Antoine Farah shed light on the circumstances surrounding these circulars. “The circulars issued by the Bank of Lebanon are exceptional circulars,” Farah explained. “A deep investigation into these circulars may lead to them being considered illegal, but we must look at this issue on the basis that it is an exceptional measure that came to compensate for the absence of a comprehensive plan for the Lebanese state and the Parliament.”
Farah emphasized that the root of the problem lies not in the circulars themselves but in the lack of a cohesive recovery strategy. “The negligence on the part of the Lebanese state and the Parliament, first in approving the ‘Capital Control’ law and then in approving a recovery plan, is what led the Bank of Lebanon over the years to take exceptional measures by issuing these circulars,” he stated.
the Case of Circular 151
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Circular 151, which has been suspended since the end of 2023, was initially introduced to allow depositors to withdraw limited amounts of cash from their accounts. However, attempts to drop the circular revealed meaningful challenges. “People would be harmed and needed their money, and there were not enough dollars to withdraw their money,” Farah noted. “thay were forced under pressure to continue this circular because it was facilitating people’s conditions in the absence of a plan.”
The Fresh Dollar Dilemma
Circular 165, on the other hand, is tied to the concept of the “Fresh Dollar,” a mechanism aimed at stabilizing the economy by distinguishing between old and new deposits. Farah warned that repealing this circular coudl have dire consequences. “Challenging this circular means canceling the so-called Fresh Dollar,” he said. “It is indeed not possible to delve into the experiment again and cancel the Fresh Dollar.”
The Fresh Dollar has played a crucial role in keeping businesses and individuals afloat during the crisis. “The generalization process that created the Fresh Dollar was aimed at making people’s businesses happen in this lost time waiting for the plan,” Farah explained. “The ‘Fresh Dollar’ today is the one that helps to operate companies and individuals partially with banks, waiting for there to be a comprehensive plan for recovery.”
The need for a Comprehensive Plan
Farah’s analysis underscores the urgent need for a recovery plan. “The problem is not with the circulars, but with the plan,” he concluded. “Canceling the circulars without an alternative does more harm then good.”
Key Points at a Glance
| Circular | Purpose | Challenges |
|————–|————-|—————-|
| Circular 151 | Facilitate limited cash withdrawals | Lack of dollars to meet demand |
| Circular 165 | Introduce the fresh dollar mechanism | Risk of destabilizing the economy |
The debate over these circulars highlights the complexities of Lebanon’s financial crisis. While they were introduced as stopgap measures, their repeal without a viable alternative could exacerbate the situation.As Farah aptly put it, “An alternative must be provided so that we can close the circulars reactor.”
For now, the fate of Circulars 151 and 165 remains uncertain, but one thing is clear: Lebanon’s path to recovery hinges on the implementation of a comprehensive and lasting plan.
the Debate Over Circulars 151 and 165: A Deep Dive into lebanon’s Financial crisis
Lebanon’s financial landscape remains in turmoil, with increasing discussions about the potential repeal of Circular 151 and Circular 165. These measures,issued by the Banque du Liban (BDL),have been pivotal in managing the contry’s economic crisis. But what led to their implementation, and what would their repeal mean for Lebanon’s fragile economy? in this exclusive interview, senior Editor of World-Today-News.com, Sarah Mitchell, sits down with economic expert Antoine Farah to explore these critical questions.
The Origins of Circulars 151 and 165
Sarah Mitchell: Antoine, thank you for joining us. To start, can you explain the context in which Circulars 151 and 165 were introduced?
Antoine Farah: Thank you, Sarah. These circulars were born out of necessity during Lebanon’s severe financial crisis. Circular 151 was introduced to allow depositors to withdraw limited amounts of cash from their accounts, addressing the acute liquidity shortage. Circular 165, on the other hand, introduced the concept of the Fresh Dollar, a mechanism to distinguish between old and new deposits and stabilize the economy. Both were stopgap measures in the absence of a thorough recovery plan.
The Case of Circular 151
Sarah Mitchell: Circular 151 has been suspended as the end of 2023. What challenges did its implementation reveal?
Antoine Farah: The main challenge was the lack of sufficient dollars to meet the demand for withdrawals. While the circular aimed to ease people’s financial hardships, it was clear that this was not a sustainable solution. Though, repealing it without an alternative would have left many individuals and businesses without access to their funds, exacerbating the crisis.
The Fresh Dollar Dilemma
Sarah Mitchell: Circular 165 introduced the Fresh Dollar. What role has this mechanism played in Lebanon’s economy?
Antoine Farah: The Fresh Dollar has been crucial in keeping businesses and individuals afloat during this crisis. It allowed companies and individuals to partially operate with banks while waiting for a comprehensive recovery plan. Though, repealing Circular 165 and canceling the Fresh Dollar would destabilize the economy further. It’s not just about the mechanism itself but the absence of a viable alternative.
The Need for a Comprehensive Plan
Sarah Mitchell: You’ve emphasized the need for a comprehensive recovery plan.Why is this so critical?
Antoine Farah: The root of the problem lies in the lack of a cohesive strategy from the Lebanese state and Parliament. The circulars were exceptional measures taken in the absence of a plan, but they are not a long-term solution. Canceling them without an alternative does more harm than good. Lebanon’s recovery hinges on implementing a comprehensive and lasting plan that addresses the underlying issues.
Key Takeaways
Sarah Mitchell: What would you say are the key takeaways from this discussion?
Antoine Farah: The key takeaway is that while Circulars 151 and 165 have served as necessary stopgap measures, they are not sustainable solutions. Lebanon’s path to recovery requires a comprehensive plan that addresses the root causes of the crisis. Until then, repealing these circulars without a viable alternative would only deepen the economic turmoil.
Sarah Mitchell: Thank you, Antoine, for this insightful conversation. It’s clear that Lebanon’s financial crisis is complex and requires thoughtful, long-term solutions.
Antoine Farah: Thank you, Sarah. It’s vital to continue these discussions to raise awareness and push for the necessary reforms.