Graffiti tags on the entrance of a Banque du Liban branch. (Credit: João Sousa/L'Orient Today)
According to information relayed by several local media outlets and confirmed by L'Orient Today through two banking sources, several banks in Lebanon are preparing to decrease the withdrawal limits allowed under Banque du Liban's Circular 161, which is currently in force until the end of September.
Issued in December, the circular officially allows banks to sell unlimited cash dollars to their customers by converting them from their accounts into lira at BDL's Sayrafa platform exchange rate. However, banking sources say that in reality BDL has imposed withdrawal limits. According to the first banking source interviewed, BDL has currently set a withdrawal limit of $500 per account per month, but many banks have already adopted lower limits, which is not prohibited by the circular's text.
The Sayrafa rate has so far been lower than the parallel exchange market rate, but still reacts to changes in the national currency's value on the parallel market. The Sayrafa rate was LL27,600 to the dollar at the time of the platform's last update on Friday evening, while the parallel market rate was around LL34,000 on Sunday evening.
Circular 161, on the other hand, is designed to mitigate the effect of restrictions on withdrawals and transfers from foreign currency accounts imposed illegally by Lebanese banks since mid-2019.
The source said that the decision to lower the limits was not taken jointly by the banks, as each one is free to choose its limit. In the past, this type of configuration has however often led to widespread adoption of the strictest measures. As evidence of the disparity in enforcement, according to the sources interviewed, some banks apply different limits at ATMs and at the counter, others apply restrictions per depositor and not per account, while others have decided to lower all withdrawals to $200.
The second banking source also said that the Circular 161 mechanism might "stop working," but did not give a specific date for when the circular would be made defunct.
"Since the beginning of the year, the limits have continued to decrease, from $10,000 per month to now $200 to $500," the source pointed out, recalling that BDL's foreign exchange reserves, from which the dollars are drawn, continue to decline. Last week, rumors indicated that the reserves are close to $9 billion — an amount that is not clearly published by BDL.
When contacted, BDL's press office assured that the institution had not taken any decision to reduce the withdrawal limits of Circular 161.
Several observers of the Lebanese economy, including investment banks and rating agencies, have repeatedly pointed out during these three years of crisis that BDL's net reserves were negative and that the gap between its liabilities and its real assets in foreign currency had become unsustainable.