Wassim Mansouri, the Central Bank’s (BDL) Acting Governor, will set off to Riyadh on Monday upon a special invitation to participate in a conference on regional financial stability. But before he leaves, he is scheduled to finalize, on Friday, the details of a new directive with BDL’s Central Council. This directive allows depositors who were previously benefiting from Circular 151 to withdraw $150 monthly and is expected to be issued in the middle of next week at the latest.
In this regard, Mansouri conveyed to Caretaker Prime Minister Najib Mikati his firm stance on recognizing only one exchange rate for the dollar, namely the market rate of 89,500 Lebanese pounds. He will not resort to setting other dollar rates below the market price, as it would be considered a haircut on deposits, a measure that cannot be taken by the Central Bank but rather by the government and parliament.
However, based on this statement, any depositor can now head to their designated bank and request the withdrawal of their deposit in dollars at the prevailing market rate, without any imposed ceiling. This becomes particularly crucial in the absence of legislation for capital controls, which would otherwise set specific limits on withdrawals. Under these circumstances, banks lack the necessary funds to fulfill depositors’ requests, underscoring the imperative need for the implementation of capital controls — an area that also falls under the authority of the government and parliament.
In the absence of legal frameworks for haircuts and capital controls, the BDL’s Central Council has renewed its commitment to safeguarding depositors’ funds as much as possible. Therefore, on Friday, it is set to approve a monthly disbursement of $150 per month for those who were benefiting from Circular 151. This circular, which expired at the end of the year, was not widely adopted by depositors due to its substantial haircut. The total cost of the new directive is estimated at a minimum of $300 million annually, with banks covering half, i.e., $150 million.
The government is still skeptical in regards to the central bank’s upcoming decision and is inclined to uphold the official exchange rate at 15,000 Lebanese pounds per dollar within the banking sector. This reflects a commitment to stick with the deposit haircut policy. While the government may contemplate a resolution reinforcing the 15,000-pound rate, sources from the Central Bank of Lebanon assert that such a decision won’t override the expected new circular, which grants depositors $150 monthly. The choice lies with depositors, who can either withdraw $150 in cash each month or persist with the deposit haircut, following the formula outlined in Circular 151. This formula might be codified in a government decision, allowing a monthly withdrawal of $1,600 — equivalent to 24 million Lebanese pounds or $270 at the market rate.
