Lebanon Banks Agree to Ease Some Curbs on Cash-Starved Depositors

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FILE - In this Jan. 14, 2020 file photo, anti-government protesters smash bank widows, during ongoing protests against the Lebanese central bank's governor, on Hamra Street, in Beirut, Lebanon. The state financial prosecutor ordered Thursday, March 5, 2020, the freezing of assets of 20 local banks and their top executives, a decision that comes amid financial turmoil in the Mediterranean country. The official news agency NNA provided no further details about the decision by judge Ali Ibrahim, which comes a few days before the Lebanese government is to decide whether it will pay a $1.2 billion Eurobond payment maturing on March 9 or default for the first time in its history. (AP Photo/Hussein Malla, File)

Lebanese banks Tuesday agreed to lift certain restrictions imposed last year to stem a crippling liquidity crisis, the National News Agency said.

Lebanon is grappling with its worst economic crisis in decades, as well as widespread public discontent with the political class since October.

Since September, banks have increasingly been imposing limits on withdrawals of both dollars and Lebanese pounds, as well as transfers abroad.

At a meeting between State Prosecutor Ghassan Oueidat and bank representatives Tuesday, both sides agreed to new rules, NNA said.

These include banks allowing depositors to withdraw up to 25 million Lebanese pounds a month (around $16,500 under the official exchange rate).

Other measures include allowing transfers abroad in hard currency for education fees, medical bills, tax purposes, “and everything else necessary,” NNA said.

Banks would not be allowed to withhold any part of money freshly transferred into a Lebanese account.

There was, however, no mention of an easing of caps on withdrawals from dollar accounts, which have been squeezed down to just $100 a week at some banks.

A judicial source said discussions were ongoing with the central bank over relaxing those limits.

Last week, Financial Prosecutor Ali Ibrahim attempted to impose an asset freeze on banks in an apparent bid to pressure them, but that order was suspended by Oueidat within hours.

Earlier in the week, Ibrahim separately called in 15 banks over an alleged more than 2 billion dollars in capital flight late last year.

On Tuesday, Oueidat began hearing the testimonies of banks’ legal counsels, owners and chairmen .

Lebanon is facing its worst economic crisis since its 1975-1990 civil war.

The value of the Lebanese pound has plummeted by more than a third on the black market, prices have risen, and many businesses have been forced to close.

The Mediterranean country, one of the most indebted in the world, this weekend announced its first default on a $1.2 billion Eurobond that matured on March 9.

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