The Lebanese Central Bank plans to cut interest rates in an\nattempt to ease the economic crisis in the country, and is considering\nformalizing the temporary capital controls that are set individually by local\nlenders.<\/p>\n\n\n\n
The Governor of the Central Bank, Riyad Salameh, told his\nassociation of banks in Lebanon that he would issue a circular within days to\nreduce rates in order \u201cto revive the economy” and curbing the increase in\n“doubtful” loans.<\/p>\n\n\n\n
The decision may buy some of the much-needed time in\nLebanon, which is suffering from its worst financial crisis in decades. While\nthe authorities are struggling to form a government after the resignation of\nPrime Minister Saad Hariri after weeks of mass protests against corruption and\nthe deterioration of living standards.<\/p>\n\n\n\n
Salam said he was considering issuing instructions that\nwould formalize the recent restrictions on capital movements imposed by\ncommercial lenders. The measures will be temporary until a new government is\nformed and the financial and economic situation is back to normal. The governor\nalso said that 165 billion Lebanese pounds ($109.2 million) were withdrawn\ndaily from the central bank in the past two months, and that the bank was\nawaiting a new payment of banknotes that would arrive on December 20.<\/p>\n\n\n\n
President Michel Aoun held a meeting last week that included\nthe governor of the Central Bank, the Minister of Finance, the Minister of\nEconomy, and the president of the Association of Banks. They instructed the\ncentral bank to take “temporary and necessary” steps in order to\nprotect the stability of the banking system.<\/p>\n\n\n\n
The crisis has undermined confidence in Lebanon’s ability to\npay off its massive public debt. According to data compiled by Bloomberg’s\nagency, the country’s debt risk, compared to virtual credit exchanges, has\nrisen to over 2,500 basis points, the second highest level after Argentina.<\/p>\n\n\n\n
The lenders-imposed restrictions on the movement of capital\nby prohibiting some transfers abroad, freezing credit lines for businesses, and\nputting an end to withdrawals at $400 to prevent banks from operating.\nOfficials, including the governor of the central bank, have said many times\nthat the country will not impose formal capital controls, which requires a\nlegal framework.<\/p>\n\n\n\n
Three major banks in Lebanon were cut last month under\nsovereignty by the global rankings of the Standard & Poor’s Index, which\nwarned that the country’s economic crisis is draining liquidity from lenders. A\nweek before the cut, the central bank instructed local lenders to raise their\ncapital by 20 percent by next June, and to refrain from dividends for 2019 to\nincrease liquidity and prepare for possible credit cuts.<\/p>\n\n\n\n
The union said it would reduce the ratings if there was\n“additional pressure on banks\u2019 liquidity positions or if the banks impose\nfurther restrictions on specific transfers and operations.\u201d<\/p>\n\n\n\n
Lebanon relies on the influx of millions of its citizens who\nlive abroad. However, the capital inflows required to finance the large current\naccount and the fiscal deficit went down with decreasing confidence. The\ncentral bank began to ration dollars even before the turmoil erupted on October\n17, which pushed the demand for foreign currency and created the black-market\nprice, which is currently 30 percent higher than the fixed exchange rate. The\nmove thwarted trade and imports in a country that relied almost entirely on\nforeign goods. The central bank said it would supply fuel, wheat and\npharmaceutical importers with most of their dollar needs.<\/p>\n\n\n\n
As the crisis deepened, the president has yet to set a date\nfor parliamentary talks to nominate a new prime minister. Hariri, who resigned\nin October to counter escalating protests, said he would no longer be prime\nminister and would prefer to form a government of experts.<\/p>\n","protected":false},"excerpt":{"rendered":"
The Lebanese Central Bank plans to cut interest rates in an attempt to ease the economic crisis in the country, and is considering formalizing the temporary capital controls that are set individually by local lenders. […]<\/a><\/p>\n<\/div>","protected":false},"author":1,"featured_media":1500,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2],"tags":[137,141,74,66,79,50,77,105,36,34,145,114,38,151,37,23,109,121,81,115],"_links":{"self":[{"href":"https:\/\/skyeconomynews.com\/wp-json\/wp\/v2\/posts\/1499"}],"collection":[{"href":"https:\/\/skyeconomynews.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/skyeconomynews.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/skyeconomynews.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/skyeconomynews.com\/wp-json\/wp\/v2\/comments?post=1499"}],"version-history":[{"count":1,"href":"https:\/\/skyeconomynews.com\/wp-json\/wp\/v2\/posts\/1499\/revisions"}],"predecessor-version":[{"id":1501,"href":"https:\/\/skyeconomynews.com\/wp-json\/wp\/v2\/posts\/1499\/revisions\/1501"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/skyeconomynews.com\/wp-json\/wp\/v2\/media\/1500"}],"wp:attachment":[{"href":"https:\/\/skyeconomynews.com\/wp-json\/wp\/v2\/media?parent=1499"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/skyeconomynews.com\/wp-json\/wp\/v2\/categories?post=1499"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/skyeconomynews.com\/wp-json\/wp\/v2\/tags?post=1499"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}