Lebanese banks will continue to allow customers to withdraw their dollar savings in local currency at a rate higher than the official peg, Central Bank governor Riad Salameh said on Thursday.
Mr Salameh’s remarks followed a meeting with President Michel Aoun and the head of Lebanon’s highest administrative court, the Shura Council, which had suspended two days earlier a Central Bank circular that allowed depositors to withdraw their savings in foreign currencies at rate of 3,900 Lebanese pounds to the dollar as opposed to the official rate of 1,515.
The Central Bank’s announcement a day earlier that it was complying with the Shura Council’s provisional resolution prompted many depositors to queue at ATMs later that night to withdraw their dollars before banks acted on the decision.
But Mr Salameh reassured depositors following Thursday’s meeting that the circular remains effective since the Central Bank had yet to receive a “valid copy of the decision for implementation” purposes and after having asked the court to reconsider its position in light of “new elements” in the case.
A statement released by the Central Bank late on Wednesday said it had asked the Shura Council to reconsider its position given the circular’s important impact on “social stability and reviving economic activity”.
The Central Bank’s circular had authorised banks, which have been imposing informal capital controls since the worst financial crisis to engulf Lebanon erupted in late 2019, to withdraw their dollar savings at the 3,900 rate as the pound plummeted on the black market.
The national currency has lost more than 85 per cent of its market value since the crisis unfolded, with the dollar trading at a market rate of 13,000 pounds, effectively forcing clients to take a 70 per cent loss on their dollar deposits when withdrawing at the 3,900 rate. The suspension of the circular would have put that loss at around 90 per cent.
Antoine Sfeir, a lawyer and law professor, described Thursday’s announcement as a “gentlemen’s agreement” with no legal ramifications so far.
"The Shura Council's resolution remains binding for the Central Bank until the court issues its final ruling in the case," Mr Sfeir told The National but added that banks assume no legal liability for disbursing dollars at the 3,900 rate in line with the Central Bank's directives.
Banks were largely empty on Thursday morning, with one bank employee telling The National that the situation was "completely normal".
That sentiment was shared by some depositors who were expecting the Central Bank to find a workaround to disburse dollars at the 3,900 rate.
Standing outside a bank branch in the neighbourhood of Ashrafieh, surgeon Milad Sabbagh said that he would rather not withdraw money from his dollar account in the coming days. "I think the central bank will reverse its decision," he told The National before Mr Salameh spoke from the presidential palace
Pascal Daher, a law professor and one of three lawyers who had petitioned the Shura Council to overturn the Central Bank's circular, had told The National earlier in the day that BDL's decisions were illegal.
“The State Shura Council’s decision is clear. Banks should issue money in the currency that it has been deposited in. Any issuance in an alternative currency is illegal, otherwise, banks are considered to be suspending payment. That’s the law,” Mr Daher said.
Such a brutal and rapid contraction is usually associated with conflicts or wars
World Bank
The latest controversy comes as Lebanon struggles to maintain vital imports of fuel and medication amid shortages in foreign currencies.
On Wednesday, the World Bank said Lebanon financial and economic crisis is likely to rank in the top 10, possibly top three, most severe crises episodes globally since the mid-nineteenth century.
The report noted that Lebanon’s GDP plummeted from close to $55 billion in 2018 to an estimated $33bn in 2020.
“Such a brutal and rapid contraction is usually associated with conflicts or wars,” the World Bank report said, adding that the crisis has left more than half of the country’s population below the poverty line.
Hours after the report was released, Lebanon’s caretaker Prime Minister Hassan Diab warned that Lebanon was "in the heart of great danger” and urged the international community to provide financial aid "before it is too late".
Dhadak
Director: Shashank Khaitan
Starring: Janhvi Kapoor, Ishaan Khattar, Ashutosh Rana
Stars: 3
Killing of Qassem Suleimani
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5
Two-step truce
The UN-brokered ceasefire deal for Hodeidah will be implemented in two stages, with the first to be completed before the New Year begins, according to the Arab Coalition supporting the Yemeni government.
By midnight on December 31, the Houthi rebels will have to withdraw from the ports of Hodeidah, Ras Issa and Al Saqef, coalition officials told The National.
The second stage will be the complete withdrawal of all pro-government forces and rebels from Hodeidah city, to be completed by midnight on January 7.
The process is to be overseen by a Redeployment Co-ordination Committee (RCC) comprising UN monitors and representatives of the government and the rebels.
The agreement also calls the deployment of UN-supervised neutral forces in the city and the establishment of humanitarian corridors to ensure distribution of aid across the country.
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
The years Ramadan fell in May
Financial considerations before buying a property
Buyers should try to pay as much in cash as possible for a property, limiting the mortgage value to as little as they can afford. This means they not only pay less in interest but their monthly costs are also reduced. Ideally, the monthly mortgage payment should not exceed 20 per cent of the purchaser’s total household income, says Carol Glynn, founder of Conscious Finance Coaching.
“If it’s a rental property, plan for the property to have periods when it does not have a tenant. Ensure you have enough cash set aside to pay the mortgage and other costs during these periods, ideally at least six months,” she says.
Also, shop around for the best mortgage interest rate. Understand the terms and conditions, especially what happens after any introductory periods, Ms Glynn adds.
Using a good mortgage broker is worth the investment to obtain the best rate available for a buyer’s needs and circumstances. A good mortgage broker will help the buyer understand the terms and conditions of the mortgage and make the purchasing process efficient and easier.
School counsellors on mental well-being
Schools counsellors in Abu Dhabi have put a number of provisions in place to help support pupils returning to the classroom next week.
Many children will resume in-person lessons for the first time in 10 months and parents previously raised concerns about the long-term effects of distance learning.
Schools leaders and counsellors said extra support will be offered to anyone that needs it. Additionally, heads of years will be on hand to offer advice or coping mechanisms to ease any concerns.
“Anxiety this time round has really spiralled, more so than from the first lockdown at the beginning of the pandemic,” said Priya Mitchell, counsellor at The British School Al Khubairat in Abu Dhabi.
“Some have got used to being at home don’t want to go back, while others are desperate to get back.
“We have seen an increase in depressive symptoms, especially with older pupils, and self-harm is starting younger.
“It is worrying and has taught us how important it is that we prioritise mental well-being.”
Ms Mitchell said she was liaising more with heads of year so they can support and offer advice to pupils if the demand is there.
The school will also carry out mental well-being checks so they can pick up on any behavioural patterns and put interventions in place to help pupils.
At Raha International School, the well-being team has provided parents with assessment surveys to see how they can support students at home to transition back to school.
“They have created a Well-being Resource Bank that parents have access to on information on various domains of mental health for students and families,” a team member said.
“Our pastoral team have been working with students to help ease the transition and reduce anxiety that [pupils] may experience after some have been nearly a year off campus.
"Special secondary tutorial classes have also focused on preparing students for their return; going over new guidelines, expectations and daily schedules.”
HIJRA
Starring: Lamar Faden, Khairiah Nathmy, Nawaf Al-Dhufairy
Director: Shahad Ameen
Rating: 3/5
Banthology: Stories from Unwanted Nations
Edited by Sarah Cleave, Comma Press
More on animal trafficking
