Budget fails to protect small depositors with dubious article

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Late last year, Lebanese officials sought to ease concerns by vowing to raise protection limits from 5 to 75 million Lebanese pounds.

by Georgi Azar-Source: Annahar

A file photo of Lebanon’s parliament (AP)

BEIRUT: Measures to protect bank deposits fall short of safeguarding small depositors, with the new proposal merely acting as a media stunt according to the Legal Agenda, a not-for-profit organization assessing Lebanese laws and regulations.

The new proposal had sought to guarantee deposits of up to 75 million Lebanese pounds, yet a closure at the recently ratified 2020 state budget shows that it actually guarantees up to 30 percent of that value, or 22.5 million Lebanese pounds. The rest of the balance is to be paid out either in installments or through treasury bonds within one year in line with the decision of the Central Bank.

Article 40 of the budget also notes that the Central Bank is not constrained by the one year limit to set treasury bonds maturities. Legal Agenda also took into consideration the slippage of the Lebanese lira, which has lost almost 30 percent of its value on the black market.

Late last year, Lebanese officials sought to ease concerns by vowing to raise protection limits from 5 to 75 million Lebanese pounds.

Lebanese MP Ali Bazzi, citing the country’s parliament speaker, said that work was underway to protect bank deposits amid a financial crisis that has shaken confidence in the country’s banks.

Bazzi said parliament was ready to “secure the preservation of people’s rights” and that small depositors and the deposits of expatriates would be protected.

On Monday, Hezbollah, Amal, the Free Patriotic Movement and their allies passed the 2020 budget under shady conditions while barely scraping the necessary votes.

The budget was drafted by the previous government, which resigned following a popular uprising accusing the ruling political class of mismanagement of public funds over the past two decades.

 

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