The president of the parliamentary budget and finance committee, the deputy Ibrahim Kanaan questioned the governor of the Bank of Lebanon, Riad Salamé, from the parliament, the President of the banking control commission and the President of the Association of Banks of Lebanon (ABL) concerning various cases, including the refusal of banking establishments to apply the law which established a student dollar and the obligation of the latter also to recover 3% of the sums transferred abroad since 2017, in accordance with a circular of the central bank.

An estimate of $ 2 billion in funds transferred to Switzerland alone

As a reminder, the Attorney General of the Republic, Judge Ghassan Oueidat, officially asked the Swiss authorities and their Lebanese counterparts on December 30, 2019 , information concerning the transfer of funds to the Helvetian country. At the time, it was estimated at more than 11 billion dollars the funds transferred abroad after the establishment of a moratorium on transfers abroad by the Association of Banks of Lebanon (ABL) since last October. with the closure of local financial establishments following the demonstrations of October 17, then the introduction of capital controls in November.

Since then the monetary authorities have estimated the sums illegally transferred at $ 5 billion

Still at the time, some sources mention the sum of $ 2 billion, others that of $ 11 billion which would have been transferred to accounts in Switzerland. This money would belong to Lebanese politicians and businessmen who would thus try to cope with a possible downgrade of their accounts in Lebanon or the risk of seeing certain banks go bankrupt.

And the unwillingness of politicians and bankers to transfer

In addition, the Banque du Liban had called on local financial institutions to increase their own funds to 20% of deposits and to repatriate 3% of the sums they hold with their corresponding banks by February 28, 2020 as stipulated by the circular 154.

This same circular asks bank presidents, members of the board of directors, major shareholders and senior executives, as well as clients identified as “politically vulnerable persons” and who have transferred abroad more than $ 500,000 or its equivalent in other foreign currencies since July 2017, to deposit 30% of these funds and block them for five years.

Some sources have indicated that in the face of these refusals, some banks have bought large amounts of dollars in recent weeks on the black market, purchases having unbalanced supply and demand and caused a significant de facto devaluation of the Lebanese pound against the dollar. .
A number of these financial officials finally announced their resignations so as not to be obliged to repatriate their funds.

The unwillingness of banking establishments to repatriate funds transferred abroad

As a reminder, the Banque du Liban had called on local financial institutions to increase their own funds to 20% of deposits and to repatriate 3% of the sums they hold with their corresponding banks by February 28 stipulated by circular 154 .

If the banks were able to increase their own funds, many of them failed to repatriate the 3% ratio deposited with the correspondent banks. Only nearly $ 400 million out of the $ 5 billion could thus be transferred to Lebanon.

In addition, they would also have faced the refusal of a certain number of depositors to repatriate 15% of funds transferred abroad since 2017 if these sums exceeded USD 500,000 or for importers, a proportion equivalent to the total amount of letters of credit they opened during the same period.

This same circular asks bank presidents, members of the board of directors, major shareholders and senior executives, as well as clients identified as “politically vulnerable persons” and who have transferred abroad more than $ 500,000 or its equivalent in other foreign currencies since July 2017, to deposit 30% of these funds and block them for five years.

A number of these financial officials have announced their resignations so as not to be obliged to do so.

Some sources have indicated that in the face of these refusals, some banks have bought large amounts of dollars in recent weeks on the black market, purchases having unbalanced supply and demand and caused a significant de facto devaluation of the Lebanese pound against the dollar. .

Refusal of banks to apply the student dollar law

Now many Lebanese students based abroad report the refusal of their institutions to continue their studies. In question, the delays taken for the payment of their schooling.

The Association of Banks of Lebanon has indeed set up an informal capital control since November 2019, preventing depositors from making transfers abroad despite the various circulars of the Banque du Liban providing for an exception in this regard. and paradoxically taking note of measures aimed at limiting transfers abroad.

Among those affected by these measures, Lebanese students living abroad who are thus prevented from being able to pay their tuition fees or their accommodation.

On September 30, the parliament adopted a law allowing the transfer of funds to foreign establishments of Lebanese students already present there or on proof of invoice for rental of accommodation up to the threshold of USD 10,000. annually.

This law came into force on October 19 after the President of the Republic signed the decree establishing it.

Faced with the law, the Lebanese banks replied that only a decision of the Banque du Liban could oblige them to do so, obliging the governor of the Banque du Liban Riad Salamé to publish the circular 13297 calling on the banking establishments to respect the law 193 adopted on the 14th. October 2020 establishing a student dollar, this after several demonstrations, in particular in front of the headquarters of the central bank.

For the time being, Lebanese banks are still refusing to apply the new legislation, without the Banque du Liban – as the supervisory body of the latter – yet intervening to oblige them.

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