Central Bank of Lebanon Intermediary Decision No. 13228 Amending Basic Decision No. 6116 on Facilities for Banks and Financial Institutions

Intermediary Circular No. 556

To Banks and Financial Institutions

We enclose for you Intermediary Decision No. 13228 dated 27/5/2020 regarding the amendment of Basic 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 May 27, 2020

Governor of the Central Bank of Lebanon

Riad T. Salamah

Intermediary Decision No. 13228

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

The Governor of the Central Bank of Lebanon,

Pursuant to the Monetary and Loan Law, particularly Article 70 thereof,

And pursuant to Basic Decision No. 6116 dated 7/3/1996 and its amendments regarding the facilities that may be granted by the Central Bank of Lebanon to banks and financial institutions,

And given that the current exceptional circumstances in Lebanon have significantly impacted the financing of imports of industrial raw materials,

And pursuant to the powers vested in the Governor to ensure the continuity of the Central Bank's operations based on the principle of continuity of public service,

Decides as follows:

Article One: Article Fourteen bis-2 is added to Basic Decision No. 6116 dated 7/3/1996 with the following text:

«Article Fourteen bis-1-2: Banks operating in Lebanon may request the Central Bank of Lebanon to secure 90% of the value of imported raw materials in foreign currency for authorized industrial institutions, subject to a total limit of 100 million US dollars or its equivalent in other foreign currencies, provided that the client does not benefit from the provisions of this Article in any import operation up to a maximum limit of five thousand US dollars or its equivalent in foreign currency.

2- The procedure and conditions imposed for benefiting from this Article shall be determined by a decree issued by the Minister of Industry for this purpose.

3- The concerned banks shall submit the requests subject to this Article to the Financing Unit at the Central Bank of Lebanon after approval by the Ministry of Industry, with the aim of transferring the requested amounts from the foreign currency accounts of the concerned banks held at the Central Bank of Lebanon.

4- Industrial institutions benefiting from the provisions of this Article and engaged in exports shall transfer to Lebanon a portion of the foreign currency resulting from export operations equivalent, at least, to the value of the imported raw materials used in manufacturing the products they export.

5- Banks shall ensure, under their full responsibility, the proper application of the conditions stipulated in this Article and the purpose for which it was established, under the supervision of the Central Bank of Lebanon taking appropriate measures, particularly obliging the non-compliant bank to deposit a special reserve generating no interest at the Central Bank of Lebanon, equivalent to the value of the amounts from which benefit was derived.»

Article Two: This Decision shall be effective for one year from the date of its issuance.

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

Beirut, on May 27, 2020 Governor of the Central Bank of Lebanon

Riad T. Salamah