The facade of Banque du Liban in the Hamra area of Beirut. (Credit: PHB)
Banque du Liban on Saturday introduced a new mechanism under which depositors will be able to withdraw $150 in US dollars each month from dollar-denominated bank accounts. Access to dollar bank deposits in Lebanese banks has been subject to informal capital controls since the depth of the financial crisis in the country became apparent in 2019.
The new mechanism, instituted by the publication of Circular No. 166, de facto replaces that established by Circular No. 151, which authorized, or obliged (depending on which side of the banking counter one stood), small monthly withdrawals in Lebanese lira from dollar-denominated accounts at an exchange rate well below the market rate. Circular No. 151 was first adopted in April 2020, and its period of application was extended several times. Its last extension expired on Dec. 31.
Although the new circular goes into effect immediately, it is likely to take several days for the country's commercial banks to implement it, according to a source within the banking sector.
Other categories of depositors, in particular beneficiaries of other mechanisms to manage banking restrictions resulting from the financial crisis, such as Circular No. 158, will be ineligible to benefit from Circular No. 166. Published in June 2021, Circular No. 158 authorizes beneficiaries selected each month, according to precise terms and conditions, to withdraw $300 or $400 in "fresh" dollars from "Lebanese dollar" or "lollar" accounts. This circular's validity has also been extended several times and will remain in force until at least the end of June.
Circulars No. 151 and No. 158 also coexisted for a time with Circular No. 161, which allowed depositors — individuals, civil servants and companies — to convert Lebanese lire into US dollars at the rate offered by the Sayrafa platform, which BDL operates, and which has always been lower than the market exchange rate but higher than the official rate. It was therefore a way of obtaining dollars at a subsidized rate.