25 Jan 2019; MEMO: Lebanon’s central bank said on Saturday there would be no “haircut” on deposits at banks due to the country’s financial crisis, responding to concerns voiced by a prominent Arab billionaire about risks to foreign investments there.
Emirati businessman Khalaf Ahmad al-Habtoor, founder of the Al Habtoor Group that has two hotels in Beirut, posted a video of himself on his official Twitter account asking Lebanon’s central bank governor if there was any risk to dollar deposits of foreign investors and whether there could be any such haircut.
“The declared policy of the Central Bank of Lebanon is not to bankrupt any bank thus preserving the depositors. Also, the law in Lebanon doesn’t allow haircut,” the Banque Du Liban (BDL) said in a Twitter post addressed to Habtoor, from Governor Riad Salameh.
“BDL is providing the liquidity needed by banks in both Lebanese pound and dollars, but under one condition that the dollars lent by BDL won’t be transferred abroad.”
“All funds received by Lebanese banks from abroad after November 17th are free to be transferred out,” it added on its official Twitter account.
The heavily indebted country’s crisis has shaken confidence in banks and raised concerns over its ability to repay one of the world’s highest levels of public debt.
Seeking to prevent capital flight as hard currency inflows slowed and anti-government protests erupted, banks have been imposing informal controls on access to cash and transfers abroad since last October.
A new government was formed this week, and its main task is to tackle the dire financial crisis that has seen the Lebanese pound weaken against the dollar.
Habtoor had asked Salameh for clarity for Arab investors concerned about the crisis and those thinking of transferring funds to Lebanon to try to “help the brotherly Lebanese”.
