The Central Bank of Lebanon has amended the system of withdrawing deposits in foreign currencies for bank customers to become only $400 per month in dollars, instead of the previous $800, half of which is in dollars and the other half in Lebanese pounds, according to a circular issued by the bank to banks on Wednesday.
Thus, the Banque du Liban has canceled the possibility of the depositor withdrawing the equivalent of $ 400 in pounds from his account per month.
In light of an economic collapse that has been going on for more than 3 and a half years, accompanied by a deterioration in the value of the local currency, Lebanon imposed restrictions on withdrawing the funds of depositors in foreign currency.
And according to Wednesday’s circular, it was decided to amend some articles of articles that were mentioned in a previous amendment to Resolution No. 158 regarding exceptional procedures for the gradual payment of deposits in foreign currencies.
The circular stipulated that the depositor may withdraw $400 per month from the amounts transferred to his account before July 1, 2023, provided that the total amount withdrawn annually does not exceed $4,800.
As for the money that will be transferred to the account after June 30, 2023, the depositor will be able to withdraw an amount of $ 300 per month from it, provided that the total amount withdrawn annually does not exceed $ 3,600.
Thus, the maximum monthly withdrawal from deposits in foreign currencies ranges between 300 to 400 dollars, depending on the timing of receiving the transfers.
In light of the restrictions that depositors in Lebanon face to withdraw their deposits in foreign currencies, several banks have witnessed, since last year, cases of storming and assaults by depositors in an attempt to access their money.
What are the reasons?
Muhammad Tarabay, a lecturer and head of the Department of Financial and Economic Sciences at Rafic Hariri University in Lebanon, told Zawya Arabi that Wednesday’s decision is in the interest of depositors, because they were withdrawing the lira at an exchange rate of 15,000 pounds to the dollar, while the exchange rate in the parallel market reached nearly 1,000 pounds. 100 thousand pounds to the dollar.
However, he added at the same time, “Limiting to $400 per month is an amount that remains very small for the Lebanese citizen, especially since he had large sums in the bank, meaning $50,000 – for example – and that it will take ten years to return them (withdraw them).”
Tarabay believes that the aim of the recent circular is to stop printing the lira and reduce the exchange rate, explaining that the Banque du Liban was printing money to pay depositors for the $400 in lira.
The analyst said, “The Banque du Liban apparently wants to withdraw the lira from the market because the quantity that was printed was very large, which led to an increase in the exchange rate, and now it has begun to decline slightly because the central bank has begun to withdraw the lira from the markets.”
In addition, Tarabay believes that the decision may also be within the framework of the Bank of Lebanon’s attempt to “go to unify the different exchange rates in the market so that it can say that it fulfills the demands of the International Monetary Fund” to unify the exchange rate.
The Lebanese government is not making significant progress in a program of reforms that the International Monetary Fund requires the country to meet conditions for implementing a financing program that it reached a preliminary agreement with the fund in April 2022 at a value of three billion dollars.
The financing of the IMF is important to help Lebanon in its economic crisis, which caused the pound to lose 98% of its value, and the foreign reserves of the Banque du Liban shrank by about two-thirds.
(Prepared by: Maryam Abdel-Ghani, to communicate with zawya.arabic@lseg.com)
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2023-07-05 20:48:45
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