Lebanon central bank reassures foreign investors about deposits

Lebanon’s Central Bank Governor Riad Salameh speaks during a news conference at Central Bank in Beirut, Lebanon, November 11, 2019. (Reuters/File Photo)
Short Url
Updated 25 January 2020

Lebanon central bank reassures foreign investors about deposits

  • Khalaf Ahmad Al-Habtoor asked if there was any risk to dollar deposits
  • The heavily indebted country’s crisis has shaken confidence in banks

BEIRUT: 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 UAE businessman about risks to foreign investments there.

Emirati 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 Al-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.

Al-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.”

IMF approves $450 million for Pakistan

Updated 27 February 2020

IMF approves $450 million for Pakistan

  • Concerns were raised recently about the future of the $6 billion bailout program
  • IMF’s decision will restore foreign investors’ trust in Pakistan, analysts say

KARACHI: The International Monetary Fund (IMF) on Thursday reached a staff-level agreement with Pakistani authorities, clearing the way for the country’s third bailout installment of $450 million.
“Completion of the review will enable disbursement of SDR 328 million (around $450 million),” Ernesto Ramirez Rigo, IMF mission chief for Pakistan, said in statement.
He added the agreement is subject to approval by the fund’s management, which is expected in early April.
IMF delegates were in Islamabad from Feb. 3 to Feb. 13 for their second quarterly review of Pakistan’s $6 billion bailout program.
When they left Pakistan without signing the staff-level agreement, concerns were raised about the future of the loan. Analysts say the staff-level agreement ends the uncertainty and investors’ trust is likely to return to Pakistan.
“Foreign investors who had backed off due to lack of clarity about the program review will now come back to the Pakistani market,” senior economist Muzamil Aslam told Arab News.
“The international lenders who had delayed lending will continue their programs for Pakistan. It will restore the confidence of international investors, because they give weightage to the IMF review,” he said.
Pakistan has so far secured $1.44 billion under the IMF loan program since July 2019.