In a series of capital control measures put in place to try to ease the effects of the financial crisis that has gripped Lebanon since October 2019, the Central Bank (BDL) instructed the banks on February 13th to lower the interest rates for customer’s deposits for both dollars and Lebanese pounds.
The interest rate was capped at 4 percent for dollar deposits and 7.5 percent for Lebanese pound deposits, according to a circular seen by AFP. This is the second time in two months that the BDL has taken such measures.
In December 2019, they had capped the interest at 5 percent for dollar deposits and 8.5 percent for Lebanese pound deposits.
As the currency keeps losing value and the crisis keeps getting worse, the Central Bank has resorted to desperate measures to limit the effects of the dollar shortage.
A week ago, the Central Bank limited the monthly withdrawal rate at $600 per month and $300 every 15 days, although it is significantly higher with people who have over $100,000 in their accounts.
The latest reduction came weeks after a statement by Finance Minister Ghazi Wazni to slash interest rates to “spur economic activity and to ease pressure on public finances.”
This reduction is, according to a source that spoke to Naharnet, part of a “more comprehensive economic rescue plan” by the Central Bank.
Prime Minister Hassan Diab promised that, by the end of the month, the government will have a comprehensive rescue plan.
Since the government has now secured the confidence vote by the parliament, they should theoretically be able to start implementing comprehensive solutions to the worsening economic crisis.
Some foreign governments, such as Switzerland, have offered to support the Lebanese regime. However, as the World Bank had previously stated, that aid will depend on the reform program that the new government will set in place.
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