The outgoing Minister of Finance, Youssef Khalil. (Credit: D.R./L'Orient Today)
BEIRUT — Outgoing Finance Minister Youssef Khalil denied “rumors” of behind-the-scenes discussions to almost double the exchange rate when withdrawing “bank dollars” or “lollars,” in a statement issued Monday.
Media reports, such as from such the daily al-Joumhouriya, claimed that officials were planning to set the rate at LL25,000 to the dollar, up from the previous rate of LL15,000. “Lollars” are dollars deposited in Lebanese banks prior to October 2019, no longer to accessible to account holders, due to illegal de-facto capital controls enforced by banks following the financial crisis.
In his statement, the minister assured that there is "no truth" to the claim that this decision is in the process of being made, nor to the idea that the Ministry of Finance would be responsible for doing so.
"The Ministry of Finance was the first to launch the exchange rate unification process with the 2022 budget and will continue to support this process, which is a pillar of financial and monetary recovery," he insisted.
Khalil nevertheless conceded that "in the exceptional circumstances, and in the absence of legislation and laws favorable to the process of recovering deposits in a sustainable manner, deciding on the issue of bank withdrawals today remains urgent" and "requires a careful study of the data concerning the capacities available to the Central Bank.”
He indicated that he was in “constant communication” with bank authorities regarding the possibility to allow depositors access to their own savings, aside from the circulars, which only concern a small percentage of account holders.
Since 2019, Lebanese depositors have been blocked from their own accounts by restrictions illegally imposed by the banks, starting in the early months of the country’s financial crisis. These restrictions have forced depositors to withdraw their dollars, deposited prior to inflation, in Lebanese pounds, at rates that are systematically less advantageous than market rates. During February, the official rate rose to meet the market rate, which stands at around LL89,500. Withdrawing a bank dollar at LL25,000 to the dollar would therefore mean accepting to lose 72 percent of the dollar's value. These restrictions do not apply to "fresh" dollars.