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Governor of the Banque du Liban, Riad Salameh, said: “The acute crisis is behind us, and that the Banque du Liban and the Oversight Committee will take all legally available procedures to reactivate the sector’s contribution to the financing of the economy. Capitalization and liquidity are essential to finance the economy and the continuity of the sector is linked to its ability to renew itself. “
Salameh’s words came during the monthly meeting held yesterday between the Banque du Liban, the Supervisory Committee and the Association of Banks.
First – Monetary and banking conditions:
His Excellency the Governor considered that the economy suffers from great problems with the total absence of treatments. The economic plan is not put into practice and there is no clarity on how to deal with the consequences of the suspension of payments (Default), which left a great impact on the economy and the financial sector. Negotiations with the International Monetary Fund are still pending. If this situation continues, there will be no return to growth or economic revitalization.
He also saw that the public treasury suffers like the economy, and that the Banque du Liban, at the request of the Ministry of Finance and based on article 91 of the Credit and Currency Law, finances in liras, on the one hand, the continued treasury deficit, and on the other hand, to subscribe to Treasuries that mature in the absence of a subscription from any other party.
He informed the association that he informed the government not to violate its mandatory reserve in foreign currency for support purposes, thus allowing practical support for two or three months for basic materials, specifically fuel, wheat and medicines, at an exchange rate of 1,500 Lebanese pounds. To the dollar and food at an exchange rate of 3,900 Lebanese pounds. For the dollar. Finally, he hoped that the government would finalize the proposal for cards to protect the purchasing power of the groups most vulnerable to living conditions.
Second – Some reasons for Circular 154:
The Governor highlighted the need for banks to adhere to the content of Circular 154, which on the one hand was aimed at restoring external liquidity, banks have the ability to form 3% as appropriate. In addition, the commitment to retransfer rates (15% for clients and 30% for PEP) contributes to strengthening liquidity. Circular 154, on the other hand, aimed to recapitalize the sector, which can exceed 20%. Banks can sell Perpetual Bonds or shares to depositors, provided that they are carried out after an evaluation process by reliable bodies.
The governor considered that the acute crisis has been left behind, and that the Banque du Liban and the Vigilance Committee will take all legally available measures to reactivate the sector’s contribution to financing the economy. Capitalization and liquidity are essential to finance the economy and the sustainability of the sector is linked to its ability to renew itself.
Third, the student dollar:
The governor saw that the Banque du Liban had issued a circular in this regard, which must be followed. The association considered that it was affirmed in the reasons that need the law approved by the Parliament that the Banque du Liban will support dollars of the students, as well as wheat and medicines. He also saw the need to create a central mechanism so that the law was not abused by resorting to more than one bank by those involved. It was agreed to wait for the practical circular to clarify all these aspects, which is supposed to be issued by the Ministry of Finance.
Fourth – Various or emerging issues:
– The governor wished and the association agreed to initiate a dialogue with representatives of depositors, with the participation of the Banking Control Commission.
– In response to a question about the fall of the external assets of the Banque du Liban between September 15 and 30 by 2,200 million dollars, the governor explained that this is mainly due to the repayment of BDL loans in dollars by part of the banks.
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