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The Acting Governor of the Lebanese Central Bank (BDL), Wassim Mansouri, stated that, as far as he is concerned, Circular 151 is obsolete. This circular determines the exchange rate for one dollar at 15,000 Lebanese pounds and sets a monthly withdrawal limit of $1,600, which is equivalent to 24 million Lebanese pounds.
Circular 151 initially set the dollar exchange rate at 15,000 pounds, based on the 2022 budget. However, this rate has since been revised in the 2024 budget, which now aligns with the current market rate of 89,000 pounds per dollar. Therefore, Circular 151 is no longer valid, and this is why: in the event of a budget approval, there will be a unified exchange rate for the dollar, which is 89,000 Lebanese pounds. As such, depositors can then withdraw dollars from the bank in Lebanese pounds at the aforementioned rate.
The BDL has declared that it will not issue a new circular to set the dollar exchange rate or impose withdrawal limits. Furthermore, it clarified that it will not undertake any actions on par with capital controls, as such measures are not within its jurisdiction. Instead, the parliament should pass legislation or capital controls, delineating withdrawal limits in conjunction with the approved budget. The absence of such legislation, coupled with a new budget, would lead to a clash between depositors and banks. Depositors would request their deposits in dollars or a portion thereof at the rate of 89,000 pounds per dollar. However, both banks and the BDL would face liquidity constraints in meeting these demands.
Therefore, there is a need to approve a capital controls law that will specify the withdrawal limits, which ought to be much lower than the threshold set by Circular 151, namely $1,600 monthly.
Mansouri has presumably conveyed a crucial message to the concerned parties in the government, the parliament, and the Ministry of Finance. He emphasized the need to endorse this approach and assume responsibility for maintaining the monetary stability that has been ongoing in Lebanon since last August. Mansouri warned of potential repercussions, highlighting that a lack of control over the situation could lead to an unpredictable surge in the dollar exchange rate.
