Lebanon’s central bank asks banks to give cheap dollar loans to people affected by Beirut explosion
BEIRUT (Reuters) – Lebanon’s central bank on Thursday asked banks and financial institutions to grant exceptional zero-rate dollar loans to individuals and businesses affected by the Beirut port explosion that caused huge damage in the capital.
Tuesday’s explosion was the most powerful in years in Lebanon, which is already reeling from an economic collapse that has seen the Lebanese pound weaken by nearly 80% since last year, due to ‘a lack of dollars, from an official peg of 1,507.5 – a rate now available only for vital imports.
Since October, banks have frozen people from their own savings accounts and blocked transfers abroad. Under an April central bank circular, they now pay depositors with dollar cash accounts in the local currency at a “market rate” well below that of the parallel market.
The central bank said exceptional loans should be made, regardless of accounts receivable limits, to individuals, private businesses, small and medium-sized businesses and corporations – with the exception of real estate developers – to carry out repairs essential in homes and businesses. .
The loans should bear no interest and be repaid over five years, he said, adding that they could be repaid in Lebanese pounds on the basis of an interbank rate of 1,515 pounds to the dollar.
The central bank would in turn provide zero-interest dollar loans to banks and financial institutions making the outstanding loans, she said.
In a separate statement, the central bank also asked money transfer companies to distribute transfers from abroad to Lebanon in dollars.
The Lebanese banking association said it was studying “specific mechanisms” to support employees and customers whose homes, shops and establishments were damaged by the blast. and would cooperate with the central bank to help them rebuild.
The economic crisis is rooted in decades of state corruption and waste.
The government began talks with the International Monetary Fund in May after defaulting on its foreign currency debt. But talks have stalled in the absence of reforms and amid a dispute between the government, banks and politicians over the extent of Lebanon’s vast financial losses.
Reporting by Ghaida Ghantous and Ellen Francis; edited by John Stonestreet and Hugh Lawson / Mark Heinrich