The Central Bank of Lebanon urged the Lebanese government on Thursday to adopt a plan to implement reforms and ration subsidies while maintaining a safety net to support people.
In a statement, the Banque du Liban (BDL) emphasized the need to develop “a single clear plan to ration subsidies and secure the foundations for reviving economic growth.”
In case the Lebanese government insists on borrowing from the Central Bank in accordance with Article 91 of the Code of Money and Credit, it must “work on approving the appropriate legal framework that allows the Banque du Liban to use the available liquidity in mandatory investments,” the BDL said.
It added that such a move must also be accompanied by the government’s “explicit commitment” to return any money borrowed from the BDL within the legally specified deadlines in Article 94 of the Code of Money and Credit, provided that the interest rate is specified in accordance with the Code’s Article 93, under a loan contract.
Additionally, the statement explained, such a contract must stipulate that the fulfillment of the loan be carried out “independently of the government’s responsibilities related to the decision to stop paying.”
The BDL went pointing out the importance of forming a government to start executing a clear plan for the implementation of reforms, which would lay the appropriate foundations for “restoring confidence, recovering the economy, and focusing on direct support for citizens and rationing subsidies.”
