Beirut, (Business News Report) – Banque du Liban (Central Bank of Lebanon) has announced it will allow commercial banks to continue buying dollars without a ceiling.
Banque du Liban said that quantities of dollars can be purchased on its Sayrafa platform rate.
The bank’s moves curbed the dollar against the pound, which rose to about 23,000 pounds to the dollar. This is compared to 34,000 pounds earlier this month.
The policy, which was agreed upon at a meeting between the Lebanese government and the central bank, has been criticized as unsustainable for its use of limited dollar reserves to support the exchange rate. According to experts, it will lead to its exhaustion, according to Reuters.
This meeting was held between Prime Minister Najib Mikati, Finance Minister Youssef Khalil, and Central Bank Governor Riad Salameh on January 11.
The bank announced, last week, that banks can buy dollars from it without a ceiling, at the price determined by Sayrafa platform, which has been setting prices better for the pound than the parallel market prices.
Despite the improvement in the price of the Lebanese currency, after this measure, the lira is still more than 90% less than its level in 2019, before Lebanon slipped into a financial crisis that pushed the majority of the Lebanese into the ranks of the poor.
The Lebanese government, which took office last September, says it aims to reach an agreement with IMF, opening the door to donor support.
But the government has not yet implemented the reforms requested by donors to address the causes of collapse such as corruption.
After Lebanon defaulted on the payment of Lebanon’s foreign debt in March 2020, the previous government headed by Hassan Diab began negotiations with the IMF based on an economic rescue plan that it had drawn up. It included reforming several sectors, including the worn-out electricity sector and the banking sector, and conducting a criminal audit of Banque du Liban’s accounts.
The IMF suspended negotiations with the Lebanese authorities, after holding 17 sessions, pending the unification of the Lebanese negotiators, especially the representatives of the government and the Central Bank; their estimates of the size of the financial losses on which the support program will be built; and how to put the required reforms into practice.
After Najib Mikati formed a new government, the IMF resumed negotiations. last December, the IMF confirmed that there had been great progress in determining Lebanon’s losses, while the central bank decided to sell dollars to banks at the exchange rate.