BEIRUT (Reuters) – Lebanon’s central bank on Thursday educated banks and financial institutions to expand outstanding dollar loans at zero interest to people and businesses affected by the Beirut port explosion that resulted in enormous damage throughout the capital.
The explosion on Tuesday has been the most effective in years in Lebanon, which is currently reeling from an economic collapse that has seen the pound weaken by almost 80% since this past year, because of a deficiency of dollars, by an official peg of 1,507.5 — a speed currently only available for critical imports.
Banks have October suspended people from their savings account and obstructed transfers abroad. Beneath an April central bank round, they currently pay depositors with buck balances in cash the local currency at a “market rate” well below that of the parallel market.
The central bank said the exceptional loans should be made, regardless of customer account limits, to individuals, private businesses, small and medium-sized enterprises and corporations — with the exception of real estate developers — to carry out essential repairs to homes and businesses.
The loans should carry no interest and be repaid over five years, it said, adding that they could be repaid from Lebanese pounds based on an interbank rate of 1,515 pounds to the dollar.
The central bank would in turn provide dollar loans in zero interest to the banks and financial institutions granting the exceptional loans, it said.
The fundamental bank, in another statement, also taught cash transfer homes to disperse transfers from overseas to Lebanon in bucks.
The financial crisis is rooted in years of state waste and corruption. The authorities entered discussions with the International Monetary Fund in May after defaulting on its foreign debt. However, the discussions have stalled at the lack of reforms and also amid a row between the government, politicians and banks across the scale of the nation’s enormous financial losses.
(Reporting by Ghaida Ghantous and Ellen Francis; editing by John Stonestreet and Hugh Lawson)
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