Listen to the article
The Central Bank’s (BDL) first deputy governor Wassim Mansouri issued on Saturday Circular 166 on exceptional measures for the gradual repayment of bank deposits made in foreign currency after the date of 10/31/2019.
Mansouri specified that Circular 166 was adopted after he had obtained the opinion of the Association of Banks in Lebanon (ABL), then by Articles 70 and 174 of the Money and Credit Code, and finally based on the decision taken by the BDL Central Council, which met on 2/2/2024.
Circular 166 will expire on June 30, 2024. However, it is subject to renewal or amendment.
Under Circular 166, the BDL has instructed banks to allow holders of bank accounts denominated in foreign currency set up after October 31, 2019, to withdraw the sum of one hundred and fifty dollars per month in cash.
To this end, a maximum sum of 4,350 lollars (bank dollars) could be placed in a special sub-account in fresh dollars, which will not be subject to account opening fees.
The monthly payments will be financed half by the commercial banks and half by their mandatory investments with BDL.
Eligible account holders can only take advantage of Circular 166 from a single bank account, even if they hold several accounts at different banks.
They must also meet the following conditions:
– Not to have transferred abroad sums from their foreign currency accounts after 31/10/2019 based on the provisions of Circular 158 of 27/8/2020.
– Not to have been involved in trading bank cheques.
– Not to have converted sums over $300,000 from their Lebanese pound accounts to dollar accounts, except end-of-service indemnities, after October 31, 2019.
– Not having repaid in Lebanese pounds the loans granted to them in dollars.
– Not to have taken advantage of the Sayrafa foreign exchange platform for a sum over $75,000.
– Not to have taken advantage of the effects of Circular 158.
Circular 167
The BDL also published Circular 167 on Saturday, in which it enjoined banks, when drawing up their financial statutes, to convert their monetary accounts and assets denominated in foreign currencies, as well as their non-monetary accounts and assets, into Lebanese pounds based on the exchange rate on the Central Bank’s electronic platform.
Ambiguity
Circulars 166 and 167 are somewhat ambiguous. Circular 166 does not specify the exchange rate for withdrawals above $150, whereas Circular 167 refers to the exchange rate of the BDL’s electronic platform, which does not exist until further notice.
The BDL Balance Sheet
According to several observers, the slight but steady improvement in BDL’s foreign currency reserves may have contributed to a broadening of the base of depositors benefiting from dollar cash withdrawals.
According to the latest BDL balance sheet, the Central Bank’s reserves rose by $50 million during the second half of January 2024, i.e. over twelve business days. Its reserves currently stand at $9.58 billion.
