At this stage of our current situation, it is farfetched to assume that the general Lebanese public does perceive the banking system as a friend.
With strict withdrawal limits and over the counter access to money just released days ago, the baking system has taken a major blow to its integrity and trust since last October 2019.
On that note, Bank Audi has called on Lebanon’s Cabinet to impose “formal capital controls” in 2020 until confidence in the country is restored.
As reported by The Daily Star, and as elaborated in its fourth-quarter 2019 Lebanon economic report, Bank Audi believes that it is “required” for the Lebanese Government to first impose formal capital controls and repatriation mechanisms in 2020.
Bank Audi further stressed that it believes it is important to issue a law governing capital controls.
That includes providing a list of emergency transfers with caps on each of them, the restrictions on imports that have Lebanese substitutes, the financing facilitation of imports of raw materials for local production, and imposing caps on overseas remittances of foreign workers in Lebanon.
Lebanese banks have been applying quite unpredictable and unannounced capital controls on withdrawals on their depositors, and most notably on US Dollars.
Banks have argued that they are “forced” to implement these measures in order to prevent the mass exodus of US Dollars from the Lebanese market.
The Central Bank and lenders estimate that over USD 5 billion in banknotes have been withdrawn before and after the onset of the revolution on October 17th, 2019.
Bank Audi’s report stressed that the Cabinet needs to tackle the following five points first, and urgently:
The adjustment of public finances;
Monetary adjustment with the foreseen drop in Central Bank’s reserves amid the significant annual financing needs in foreign currency;
Banking adjustment with the needed harmonization of banking measures and a further cut in interest rates; and
Growth and job creation.
Bank Audi concluded: “If reforms are adequately implemented, Lebanon can still move into an era of gradual containment of risks and threats as a prerequisite for economic recovery in the medium to long term.”
The bank currently gives depositors a 1.6 million Lebanese Pound withdrawal limit from ATMs, and a mere 300 USD limit for accounts below 100,000 USD (only over the counter).
Our team works tirelessly to ensure Lebanese people have a reliable alternative to the politically-backed media outlets with their heavily-funded and dangerous propaganda machines. We've been detained, faced nonstop cyber attacks, censorship, attempted kidnapping, physical intimidation, and frivolous lawsuits draining our resources. Financial support from our readers keeps us fighting on your behalf. If you are financially able, please consider supporting The961's work. Support The961. Make a contribution now.