On June 7, 2021, the deputy Ibrahim Kanaan, chairman of the parliamentary finance and budget committee, presented a bill on capital control which would be applied for one year but would be renewable or repealed by the Council of Ministers after the opinion of the Governor of the Banque du Liban (BDL) and the Minister of Finance. By way of comparison, Greece waited 8 years before lifting capital controls.
This proposal, which comes almost two years after the establishment by the Association of Banks of Lebanon (ABL) of an illegal capital control and was developed without obtaining all the quantified data requested from the banks (and by not taking the data quantified only of these although contested by the plan of the outgoing government and the International Monetary Fund) must still go through parliamentary committees such as that of Administration and Justice before being submitted to the vote of the Parliament to be adopted .
It will lead to the deletion of any text contradicting it with the exception of article 208 of the Currency and Credit Code which concerns banking sanctions. It will thus prevail over circular n ° 158 of the BDL which concerns the disbursement or transfer for individuals of 400 dollars per month and the equivalent in pounds based on the exchange rate on the Sayrafa platform.
The law would not apply to fresh money in accordance with circular n ° 150 of the BDL and to deposits from international organizations and embassies which could therefore be converted into any currency or transferred to any other bank in Lebanon (which would not result in the application of the law).
On the other hand, it would apply to funds transferred abroad after October 17, 2019 and repatriated since.
The BDL would be in charge of the application of the law which sets the monthly withdrawals in pounds at a limit of 15 or 20 million pounds per depositor, the limit to be set by the BDL but after having discussed with the Minister of Finance.
The conversion of books into foreign currency will be almost prohibited.
Regarding currency withdrawals from accounts created before October 17, 2019, their amounts must not exceed half of the value of the withdrawals in pounds (15 or 20 million pounds) or less than 700 dollars per month but Ibrahim Kanaan talked about $ 400 to $ 800 per month. These amounts may be transferred abroad in the case of transfers or credits related to students enrolled before October 17, 2019, rents, mortgage loans, taxes owed abroad and internet bills. The BDL will play a central role in these transfers whereas it could have been entrusted to the Banking Control Commission or even to the courts. Banks will be penalized if they do not respect the law.
On June 16, 2021, the spokesperson for the International Monetary Fund (IMF), Gerry Rice, criticized the timing chosen by the said Commission and even the interest of such a law “without the support of budgetary, monetary and interest rate policies. appropriate exchange rates ”. The deputies themselves have also recognized that their law does not fall within the framework of financial consolidation, the modernization and reform of institutions, the strengthening of transparency and the restructuring of the economy and in particular the banking sector (public and private). This law also risks frightening foreign investors when Lebanon is in dire need of their funds.
Last year, the IMF made a series of comments, for example on the multiple exchange rate system, to limit undesirable effects, but they were not included in the commission’s bill.
