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2020-07-08 | 13245

Facilities that may be granted by BDL to banks and financial institutions

The Central Bank of Lebanon, through Governor Riad Tawfiq Safieh, issued Central Decision No. 13245 amending Basic Decision No. 6116 to expand foreign currency financing facilities for banks and financial institutions importing essential food materials, raw materials, and farmer products. The amended Article 14 bis mandates that imported goods be exclusively for domestic consumption, requires banks to verify documentation and secure explicit client undertakings against re-export, and stipulates settlement in Lebanese Lira to secure the necessary foreign currency. Furthermore, it establishes exchange rates via an electronic platform, preserves pre-July 2020 approved applications at prior rates, and imposes strict compliance measures including a double-interest reserve and a 50% penalty charge for non-compliant banks.

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Central Bank Circular No. 564 To Banks and Financial Institutions

We enclose, with reference to Circular No. 13245 dated 8/7/2020, a copy of the Central Decision No. 6116 dated 7/3/1996 (Facilities that may be granted by the Central Bank of Lebanon to banks and financial institutions) attached to Basic Circular No. 23.

Beirut, on July 8, 2020 Governor of the Central Bank of Lebanon Riad Tawfiq Safieh

Central Decision No. 13245 Amending Basic Decision No. 6116 dated 7/3/1996

The Governor of the Central Bank of Lebanon, Pursuant to the Monetary and Banking Law, particularly Article 70 thereof, And based on Basic Decision No. 6116 dated 7/3/1996 and its amendments concerning the facilities that may be granted by the Central Bank of Lebanon to banks and financial institutions, And in light of the current exceptional circumstances through which Lebanon is passing, which have significantly impacted the financing operations for importing essential food materials and raw materials used in food industries, And based on the decision of the Central Council of the Central Bank taken during its meeting held on 8/7/2020, Decrees as follows:

Article One: The text of "Article Fourteen repeated 3" (Article 14 bis) of Basic Decision No. 6116 dated 7/3/1996 is repealed and replaced with the following text:

"Article 14 bis:

  1. Banks operating in Lebanon may request the Central Bank of Lebanon to secure foreign currency for importers' needs, covering essential food materials and raw materials used in food industries, as well as products designated for sale to farmers, as specified in a list issued by the Ministry of Economy and Trade.
  2. The procedure and conditions imposed for benefiting from this Article shall be determined by a decision issued by the Minister of Economy and Trade for this purpose.
  3. A condition for benefiting from the provisions of this Article is that the imported goods are exclusively designated for domestic consumption.
  4. Banks must fully ensure the validity and legality of the submitted documents and obtain from the client a clear undertaking confirming that the imported goods are exclusively designated for domestic consumption, whether partially or entirely, and will not be re-exported abroad. A copy of this undertaking shall be provided to the Central Bank of Lebanon.
  5. The client settles the value of the import operation in Lebanese Lira to the concerned bank, which deposits it as cash (Banknotes) at the Central Bank of Lebanon in order to secure the foreign currency required for the import operation. ../..

-2- 6. The concerned banks submit the applications subject to this Article to the Financing Unit at the Central Bank of Lebanon after obtaining approval from the Ministry of Economy and Trade. 7. The foreign exchange rate is determined according to the rate approved on the electronic platform for foreign exchange operations. All import applications previously approved by the Ministry of Economy and Trade before July 8, 2020 remain valid based on the exchange rate specified for these operations prior to that date. 8. The Central Bank of Lebanon transfers the value of the approved import operation in foreign currency to the account of the concerned bank with its correspondent abroad. 9. Banks must ensure, under their full responsibility, the proper application of the conditions stipulated in this Article and its intended purpose, subject to the Central Bank taking appropriate measures, particularly obliging the non-compliant bank:

  • a. To deposit a special minimum reserve at the Central Bank of Lebanon, generating interest equal to double the value of the amounts transferred to the correspondent in violation.
  • b. To pay compensation equivalent to a penalty of 50% of the value transferred to the correspondent, which is charged to the client.
  1. The Central Bank of Lebanon shall refrain from benefiting any client under the provisions of this Article in case of their violation, particularly non-compliance with Clause (3) thereof, upon notification of the violation by the concerned bank or the Ministry of Economy and Trade."

Article Two: This Decision shall be implemented upon its issuance.

Article Three: This Decision shall be published in the Official Gazette.

Beirut, on July 8, 2020 Governor of the Central Bank of Lebanon Riad Tawfiq Safieh

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