The front-piece of the BDL headquarters in Beirut's Hamra district. (Credit: João Sousa)
For the third month in a row, Banque du Liban (BDL) asked that banking institutions pay their customers benefiting from the provisions of Basic Circular 158 and 166 the equivalent of two monthly withdrawals in December, i.e. higher amounts than initially provided for.
This exception, set up thanks to Intermediate Circular 717 and 718, is similar to that adopted for November. But the amount is lower than that of October, when BDL had allowed the withdrawal of the equivalent of three monthly payments. As in the previous two months, BDL acting governor Wassim Mansouri justified the decision, which was approved by the central board on Tuesday, given the “emergency conditions facing the country.” BDL added that the provisions of these two circulars will be applied again as per their initial terms as of January.
BDL noted in its press release that the beneficiaries of one of these two circulars will be able to benefit from one, once they no longer benefit from the other, “without having to wait for the end of the annual cycle,” namely in June. On the other hand, in its two intermediate circulars, BDL provides for an increase in the annual withdrawal ceilings, taking into account the additional monthly payments made between October and December.
Coping with the banking crisis
Applicable until June 2025, Circulars 158 and 166 instituted two withdrawal mechanisms issued by the BDL since the outbreak of the banking crisis five years ago. They were aimed at partially compensating for the effects of the illegally imposed restrictions on accounts opened and funded before the end of 2019.
Circular 158, issued on June 8, 2021, authorizes “fresh” dollar withdrawals from the dollar bank accounts opened before Oct. 30, 2019, which are now considered “lollar” accounts. This mechanism has already been renewed three times. Those who benefitted from this circular before June 30, 2023, withdrew $400 per month (up to $4,800 per year and a total of $50,000), compared to $300 for those who opted to benefit from it after July 1, 2023, up to $3,600 per year.
Circular 166 of Feb. 3, 2024, allows eligible depositors — those who do not benefit from Circular 158 — to withdraw $150 in “fresh” dollars per month (up to a total limit of $4,350) from their “lollar” accounts and from the amounts deposited between Oct. 31, 2019, and June 30, 2023. This has replaced another circular (Circular No. 151, which was in effect from April 2020 to December 2023) that only allowed lira withdrawals at an exchange rate well below the market rate.
In fact, the beneficiaries of Circular 158 who registered to benefit from the circular before June 30, 2023, were able in theory to withdraw $1,200 at once in October following the first exception, $800 after the second, and are eligible to receive an additional $800 in December.
Beneficiaries of the same mechanism who opted for it after June 30, 2023, were able to withdraw $900 in October, $600 in November and will be able to have an additional $600 in December. Finally, beneficiaries of Circular 166 withdrew $450 at once in October, $300 in November and will be able to withdraw $300 in December.
As a result, BDL’s foreign currency reserves fell by $468 million between late September and mid-November, to $10.19 billion, partly because of these additional monthly payments, but also because of the Israel-Hezbollah war.
This article was translated from L'Orient-Le Jour by Joelle El Khoury.
