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15 January 2020

Lebanese banks face closure if government paralysis persists

Politicians have struggled to form a new government in the months since protests brought down the cabinet of Prime Minister Saad Hariri in October 2019

Lebanese lenders have tightened restrictions on US dollar withdrawals and transfers abroad/Bloomberg

by Bloomberg

Lebanese banks are at risk of having to close if the country’s politicians fail to form a government amid a deepening financial and economic crisis that is already seen lenders impose measures to restrict the movement of capital.

According to Lebanon’s union of bank employees, the situation is dangerous and cannot continue as such without an executive authority and we might reach a point where we are forced to close.

Lebanese president appointed Hassan Diab, an academic and a former education minister, to form a new cabinet but disputes among officials have delayed the process.

Diab has insisted on a government of experts to help the country manage its crisis while the president and his allies insist on naming ministers with a political background.

Lebanese lenders have tightened restrictions on US dollar withdrawals and transfers abroad since protests erupted against the government’s decision to raise fees and taxes.

Similarly, the central bank has also been rationing foreign currency and using its dwindling reserves to cover the import of essentials such as fuel and pharmaceuticals. The measures have forced traders to turn to money changers to meet their dollar needs, creating a parallel rate higher than the fixed exchange regime.


RELATED STORIES: Lebanese banks Hassan Diab US dollar Prime Minister Saad Hariri





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