Intermediary Decision No. 13685 Amending Basic Decision No. 7835 Concerning Mandatory Reserves

Intermediary Circular No. 722 for Banks

We hereby attach a copy of Intermediary Decision No. 13685 dated January 13, 2025, concerning the amendment of Basic Decision No. 7835 dated June 2, 2001 (Mandatory Reserves), attached to the main Circular No. 84 dated June 2, 2001.

Beirut, January 13, 2025 Acting Governor of the Central Bank of Lebanon Dr. Wissam Mansouri

Intermediary Decision No. 13685 Amending Basic Decision No. 7835 dated June 2, 2001 concerning Mandatory Reserves

The Governor of the Central Bank of Lebanon, pursuant to the Monetary and Banking Law, particularly Articles 70, 76, and 174 thereof; pursuant to Basic Decision No. 7835 dated June 2, 2001 and its amendments concerning Mandatory Reserves; and pursuant to the decision of the Central Council of the Central Bank taken in its session held on January 8, 2025; hereby approves the following:

Article 1: The text of Article Two of Basic Decision No. 7835 dated June 2, 2001 is repealed and replaced with the following: "Principles for preparing and submitting statements of obligations subject to mandatory reserves to the Central Bank of Lebanon: Banks are required to provide the Statistics and Economic Research Department at the Central Bank weekly with a statement on the average obligations in Lebanese Lira subject to mandatory reserves for the week extending from Thursday through Wednesday inclusive, according to Form No. (-011RO), within a maximum deadline of the Monday following Wednesday."

Article 2: The text of Article Four of Basic Decision No. 7835 dated June 2, 2001 is repealed and replaced with the following: "Deadlines and method for calculating monetary mandatory reserves:

1. The week on which the average obligations in Lebanese Lira are calculated is defined as five days, starting on Thursday and ending on the following Wednesday, excluding Saturday and Sunday.
2. Mandatory reserves are calculated as a single five-day average (from Monday to Friday). Calculation is based on the sum of daily monetary bank balances.
3. Balances for official holidays are considered equal to the closing balance of the preceding working day, except for Thursday balances, which use the closing balance of the preceding working day, adjusted by the results (added or deducted) of Treasury bond subscriptions and maturities. This adjustment procedure does not apply to maturity dates for certificates of deposit issued by the Central Bank. In case of sudden holidays, the balance of the first subsequent working day after this holiday is used. If the entire calculation period is an official holiday, the average of the balances adopted for the immediately preceding period is used for this period, even if it includes a Thursday.
4. For calculating the mandatory reserve ratio: (a) Balances of current accounts opened in Lebanese Lira before April 19, 2023, and balances of new accounts in Lebanese Lira subject to Basic Decision No. 13548 dated April 19, 2023, are included in the daily monetary bank balances at the Central Bank. (b) The following are excluded from the daily monetary bank balances at the Central Bank: - Balances of accounts designated for US dollar purchase operations by the Foreign Exchange Unit on behalf of clients. - Balances of accounts for capital increase and frozen accounts to achieve capital increases.
5. The mandatory reserve ratio is applied based on the average obligations in Lebanese Lira subject to mandatory reserves for a single five-day period, starting from the Monday following Wednesday (i.e., the end of the period on which average obligations are calculated according to paragraph 1 of this article) and through the following Friday. For example: "Mandatory reserve average calculation periods from Monday 2025/2/3 to Friday 2025/2/7 Average obligations subject to mandatory reserves from Thursday 2025/1/23 to Wednesday 2025/1/29"

Article 3: For calculating deductions from obligations subject to partial mandatory reserves and full mandatory reserves, the concerned banks must declare weekly to the Financing Unit at the Central Bank according to the form specified in Basic Decision No. 7835 dated June 2, 2001, and submitted by the end of each Wednesday, within a maximum deadline of the following Monday instead of Saturday. Mandatory reserves are calculated on the Monday following Wednesday (i.e., the end of the period on which average obligations are calculated).

Article 4: This decision takes effect as of the position ending on January 29, 2025.

Article 5: This decision shall be published in the Official Gazette.

Beirut, January 13, 2025 Acting Governor of the Central Bank of Lebanon Dr. Wissam Mansouri