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Banking effort to revitalize dollar financing fails in Lebanon

The Association of Banks requested legal coverage for repayment in the currency of loans

Banking endeavors to accelerate the marketing of a proposal to reactivate the credit operations of the banking system in US dollars for the benefit of individual and institutional customers, including facilitating the opening of commercial credits abroad through correspondent banks, failed. This is done by introducing legal coverage that guarantees the repayment of new loans in the same hard currencies that are being contracted.

Asharq Al-Awsat learned that the President of the Association of Banks, Salim Sfeir, received cold responses and advised to be patient by the presidential references in the two authorities, given that the stage cannot bear the issuance of new laws in this field, despite the proposal being attached to facts and reasons that show its legitimacy and priority within targeting the re-injection of liquidity. in the private sector and motivating investment in important sectors that have suffered severely from the repercussions of the successive crises, relentlessly, over the past two years.

According to the bank description, the proposal is simple, practical and easy to implement. Liquidity in the national currency and in the local dollar is available in the banks, and to enable them to enter the market again, it is necessary to provide the legal framework that guarantees them their rights, so that they can legally recover their debts from the debtor, by distinguishing between loans in the national currency and those in the US dollar, so that the payment comes according to the currency of the loan. This measure is also not possible except with the fair dealing of the judiciary with these files, so that its judgments and decisions, when any dispute occurs, are not biased to one team over another, in a manner that guarantees the solution of the stumbling problems between the bank and its customers.

As for loans in Lebanese pounds, they are available in banks, but they do not meet the import, which requires the availability of foreign currency. Hence the need, according to the banking working paper, to revive the cutting platform inside banks as it has always been, and not only at the banking network, with the aim of disbursing according to the price determined by market needs and free from speculation. This is because this procedure in itself is a decisive factor in limiting price evasion, because it will allow the Central Bank to have a broader control over the currency market, enabling it to control it.

The working paper, which was presented to senior officials, indicated that since the official announcement of the government on March 9 of last year that Lebanon stopped paying its financial dues, the banking sector, as well as other ramifications of the private sector, has entered the private sector, similar to the case of liquidation, in light of paralysis. It affected all aspects of productive and vital life. This led to the flourishing of the term “black market” for exchange rates, and the extension of control over the movement of currency to the levels of trade and exchange and the needs of citizens.

In a presentation of the most prominent repercussions on the credit and financing market, the accumulation of difficulties and the widening of the margins between the exchange rates in force gradually reduced to the extent impossible the capabilities of banks to provide loans and open credits and letters of guarantee for the benefit of importers from abroad, while the internal currency market moved frequently from banks to money changers. Consequently, merchants resorted to the banking market available to them to provide the foreign currency they need to import their goods, and the operations of opening credits or paying dues abroad became part of the work of the money changers, not the banking system.

In terms of clarifications, banks have suffered from negative shifts in exchange rates chaos on their credit portfolios following the outbreak of successive crises in Lebanon. Despite its response to legal texts that stipulated postponing the repayment of working debt installments, dealing flexibly with its borrowing customers and committing to accepting the loan currency, matters became more complicated as some foreign currency debtors resorted to depositing the amounts of installments owed to banks with notaries at the official dollar rate of 1515 pounds, while the price increased Realistically, it went up to about 20 thousand pounds… which caused the creditor bank to realize real losses for financing mainly liberalized in hard currency.

Based on these sensory data, a senior banking official confirms to Asharq Al-Awsat: “We rushed to present a proposal that would revive the banking movement and, by extension, the economic process, thus contributing to stopping the deterioration, limiting the decline, the increasing layoffs of employees and workers, and expanding the circle of The unemployment. This is because banks are the mainstay of economic activity, and when they regain their normal movement, they will automatically be a catalyst in providing the national currency as well as the local dollar, with what this matter constitutes of a double boost in economic life and the revitalization and development of the private sector.”

The official explains that the “working paper” that was presented indicates that the exchange market has turned into an attractive factor for anyone wishing to obtain foreign currency, so all the private sector has moved to this market, which is witnessing large fluctuations in currency exchange rates, with the negative impact this has on the economy. . While the reality is that interest rates are currently at their lowest levels on the lira as well as on the dollar, which means that when the initial requests for banks to obtain financing from the private sector are available, then the banks will form a rapid boost to the commercial market sector and a digression to the economy.

Thus, this proposal contributes to saving the economy as well as the private sector, and it lacks only the step of approval, so that implementation can begin.