Circular 161, Which Lets People Withdraw LBP From Their Accounts At Sayrafa Rate, Is Being Extended

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The governor of the Central Bank of Lebanon, Riad Salameh, denied the news circulating about the suspension of Circular 161. He confirmed that it will be extended until the end of July 2022, and is subject to renewal.

The Governor’s statement announces that the Central Bank will continue to abide by Circular 161 until time indeterminate, at the Sayrafa rate as usual, with no amendments to be mentioned.

On December 16th, 2021, the Central Bank issued a decree that permits local banks to sell dollars to depositors at the Sayrafa rate while the monthly LBP liquidity quotas specified for each bank stay in place.

The Articles issued by the Central Bank’s Governor state the following:

Article 1:
“BDL shall provide banks with US dollar banknotes, at the USD/LBP daily exchange rate
applied to trading operations performed the day before on the Electronic
Exchange Platform “Sayrafa”, within the amount remaining from the current
month limit specified for each bank.”

Article 2:
“Banks must pay their customers the whole amounts mentioned in Article 1
above, in USD banknotes, at the above-mentioned rate, instead of paying them
in Lebanese pounds the amounts due to them as a result of cash withdrawals or
cash operations from their accounts or receivables, according to the limits
applied for such operations at the concerned bank.”

The Central Bank amended the decree in mid-January by removing the quotas set for banks amidst a rapid deterioration of the Lebanese Lira to Dollar exchange, which allows banks to sell Dollars in unlimited quantities to clients.

In an interview, Riad Salameh explained that the point of the decree is to get the dollar rate in the black market under control by withdrawing the Lebanese Pounds from the market and pumping out dollars.

At the time, he even assured that the decree will extend to workers in the public sector, who shall start receiving their paycheck in dollars.

In the meantime, the Central Bank will continue to pump dollars through the Sayrafa platform and the Lebanese Banks. This aims to enhance the dollar supply and stabilize the Dollar exchange rate in the black market.

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