The Secretary General of the Association of Banks, Fadi Khalaf, confirms in his monthly article, which was published in the special bulletin of the Association of Banks in Lebanon, that there is no liquidity for banks, refuting this through their investments in four categories:
The first of these is bank deposits with the Banque du Liban, which amounted to approximately $86.6 billion in mid-February, according to the Banque du Liban.
The second is bank deposits with correspondent banks, which have reached a negative balance.
The third is the Eurobond portfolio, which the state announced to stop paying since March 2020, and its value, after deducting provisions, amounted to $2.900 billion, and the fourth is bank loans to the private sector in foreign currencies, which decreased to $9.785 billion on 01/31/2023.
Khalaf clearly states that there is no liquidity with the banks, whether in terms of their deposits in local dollars at the Banque du Liban, which are not subject to withdrawal in cash or transfer abroad, or in terms of their negative balances with foreign banks, or in terms of their Eurobond portfolio that is not liquefiable except with what Approximately 6% of the original price.
As for loans to the private sector, the debtors pay them back either in pounds or bank checks, which return to be deposited with the Central Bank as the only option, and receive the fate of the rest of the deposits with it. This wrong and fabricated mechanism by the state has led to the repayment of approximately $28 billion in loans since the beginning of the crisis until today, which the depositor lost from the liquidity that was supposed to accrue to him. From here it is correct to say that the rich of today are the creditors of yesterday. $28 billion was won by the creditors at the expense of depositors with negligence on the part of the state, not to mention a prior conception and design.
In this context, the expert in banking risks, Dr. Muhammad Fahili, says that the Secretary-General of the Association of Banks explained the reasons for the lack of liquidity in banks, but the problem is that the depositor requests one type of liquidity, which is banknotes, whether in foreign currency or in the national currency, and the reason is good because all the circulars that Issued by the Banque du Liban, it focused on this: beginning with Circular 150 issued on April 9, 2020, which legalized the accounts in Al-Freish after insisting that they be available in cash to the depositor at any time he requested them, Circular 151 that he issued in late April 2020, where he agreed to withdraw resident dollar accounts, where It was withdrawn at the beginning at 4 thousand pounds, then after that at 8 thousand pounds, and today at the price of 15 thousand pounds, leading to Circular 158, which approved the withdrawals of 400 dollars in fresh and 400 dollars in Lebanese pounds, and this means that the matter is equal, whether these withdrawals come from the Banque du Liban or from The depositor party due to the loss of confidence, and only the only liquidity that is accepted today and legislated remains, which is the banknotes.
Fahili adds: It is impossible to have banknotes to meet the demands of all depositors, and for this reason, the loss of liquidity today is a reflection of the reality that we have reached, which is a mixture between the loss of confidence between the depositor or the citizen and the financial system in the country and the circulars issued by the Banque du Liban that were always dealing with facilitation. Exceptional withdrawals in Lebanese pounds or US dollars.
What the Secretary General of the Association of Banks said was put within the framework of clearing the banks for the arbitrary practices they carry out towards depositors, and this is not logical.
Faheili ended his speech by saying: The only certainty is the lack of liquidity, which is a natural result of the depositors’ request and the circulars issued by the Banque du Liban, and the start of the crisis and its launch was in the unorganized stumbling that the Hassan Diab government took in March of the year 2020.
So it turns out that there is no liquidity in light of the evaporation of the 86 billion dollars in the Banque du Liban that successive governments obtained, and as a result of the banks recovering loans in dollars in Lebanese pounds or at the price of 1515 per dollar. So when do we acknowledge the truth?
