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Morning Brief

‘Lollar’ rate halted, possible end for STL, local Sputnik vaccine production: Everything you need to know today

Here’s what happened yesterday and what to expect today, Thursday, June 3

‘Lollar’ rate halted, possible end for STL, local Sputnik vaccine production: Everything you need to know today

Commercial bank depositors will again withdraw so-called local dollar deposits at the offical rate of about LL1,500 to the dollar, an effective haircut of 88 percent. (Credit: João Sousa/L’Orient Today)

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Lebanon’s central bank suspended a circular permitting commercial banks’ customers to withdraw so-called local US dollar deposits that are trapped at the banks due to informal capital controls at an exchange rate of LL3,900. The decision follows a provisional ruling from the State Shura Council on Tuesday against Banque du Liban Circular 151, which enabled depositors to access “lollars” at the 3,900 rate as the lira has devalued rather than the official rate of about LL1,500 to the dollar. The council’s ruling stipulated that dollar deposits should be paid out in dollars, putting a stay on the circular in the meantime. But with commercial banks almost certainly unable to reimburse foreign currency deposits amid a liquidity crunch, a Banque du Liban spokesperson told L’Orient Today that the banks will now settle dollar deposits at the official rate, effectively imposing an 88 percent haircut on deposits given that the dollar is trading at just above LL13,000 on the parallel market. When the news broke, queues formed at ATMs across Beirut as depositors sought to access their dollars before banks acted on the suspension, and protesters blocked roads in downtown Beirut and on the highway north of the capital.

Meanwhile, customers and employees at several commercial banks, including Banque Libano-Francaise and Blom Bank, reported on Wednesday that the banks this week had suddenly and sharply decreased daily and monthly lira withdrawal limits. The newly tightened capital controls come on the heels of measures being implemented by the central bank to decrease the number of lira banknotes in circulation in an apparent bid to rein in inflation. This includes the launch of BDL’s Sayrafa platform, a currency trading application that will regulate the sale dollars to banks and money changers, thus taking lira out of circulation.

The Special Tribunal for Lebanon will shut down after July unless it secures more funding. The court, primarily established to try suspects in the 2005 assassination of former Prime Minister Rafik Hariri, announced on Wednesday that it is facing an “unprecedented financial crisis” that would force its closure unless it receives further funding, leaving cases unfinished "to the detriment of victims, the fight against impunity and the rule of law.” Last year, the Hague-based tribunal convicted former Hezbollah member Salim Jamil Ayyash in absentia in a bombing that killed Hariri and 21 others, while acquitting three other defendants. The STL was set to hold a second trial against Ayyash in connection with his alleged involvement in other attacks on political figures. The Lebanese government has so far failed to pay its 49 percent share of the tribunal’s annual budget; the remaining 51 percent is financed by foreign donors.

A factory in Lebanon’s Chouf region may begin producing the Sputnik COVID-19 vaccine as early as next month. The Arwan Pharmaceutical Industries factory, based in Jadra, has the capacity to produce as many as 60 million doses of the vaccine a year, officials said. A deal is set to be inked by mid-June between the company and the Russian Direct Investment Fund. Lebanon approved the emergency use of Sputnik V vaccines on Feb. 5, and vaccination began at the end of March, with the vaccine imported by a local company called Pharmaline. Almost 70,000 doses of the Sputnik V vaccine have been administered, according to the Impact Platform.

Public administration employees around the country launched a three-day strike on Wednesday. The employees’ action is aimed at protesting deteriorating living conditions and the erosion of their salaries’ value, as well as a proposal that all employees return to office-based work full time. In some cases, employees attended their offices on Wednesday but closed the buildings to the public and remained inside without doing any work. While many areas saw widespread compliance with the strike, the NNA reported that in Saida workers were split, with some crossing the picket line.


Want to get the Morning Brief by email? Click here to sign up.Lebanon’s central bank suspended a circular permitting commercial banks’ customers to withdraw so-called local US dollar deposits that are trapped at the banks due to informal capital controls at an exchange rate of LL3,900. The decision follows a provisional ruling from the State Shura Council on Tuesday against Banque du Liban...