Central Bank Circular No. 642

To Banks, Financial Institutions, and Leasing Companies

We refer you to Circular No. 13482 dated October 4, 2022, concerning the amendment of a copy of Central Bank Decision No.
Basic Decision No. 7743 dated January 2, 2001 (Subsidy of Interest on Loans Extended to the Industrial, Tourist, or Agricultural Sectors) attached to Basic Circular No. 80.

Beirut, October 4, 2022
Governor of the Central Bank of Lebanon
Riad T. Salam

Central Bank Decision No. 13482

Amendment of Basic Decision No. 7743 dated January 2, 2001 concerning the Subsidy of Interest on Loans Extended to the Industrial, Tourist and Agricultural Sectors

The Governor of the Central Bank of Lebanon,
Pursuant to the Monetary and Loan Law, particularly Articles 70 and 79 thereof, And based on Basic Decision No. 7743 dated January 2, 2001 and its amendment concerning the Subsidy of Interest on Loans Extended to the Industrial, Tourist and Agricultural Sectors, And since, as of the end of 1/7/2023, the LIBOR rate will be finally discontinued as a reference interest rate in global markets and therefore it is necessary to transition to adopting alternative reference rates, And with the approval of the Minister of Finance, And based on a decision by the Central Bank Council taken in its meeting held on September 14, 2022,

It is hereby decided as follows:

Article One: The text of paragraphs (b) and (c) from clause (4) of Article Two of Basic Decision No. 7743 dated January 2, 2001 is repealed and replaced with the following text:
« (b) For loans granted in US Dollars, such that the interest rate does not exceed the SOFR Term Rate (Compounded) Average for three months plus the ISDA Adjustment Spread value determined by the International Swaps and Derivatives Association (ISDA) plus 7%, with interest calculated on the date of signing the loan contract and recalculated and collected every three months on March 31, June 30, September 30, and December 31 of each year. » « (c) For loans granted in Euros, such that the interest rate does not exceed the ESTR Compounded Rate Average for three months plus the ISDA Adjustment Spread value determined by the International Swaps and Derivatives Association (ISDA) plus 7%, with interest calculated on the date of signing the loan contract and recalculated and collected every three months on the dates specified in paragraph (b) above. »

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Article Two: The text of Article Two (duplicate) of Basic Decision No. 7743 dated January 2, 2001 is repealed.

Article Three: Banks are granted a maximum deadline of June 30, 2023 to amend the contracts and related information systems associated with the aforementioned interest rates, and to notify their concerned clients accordingly, in accordance with the amendment taking effect as of July 1, 2023. This decision is issued from the date

Article Four: This decision shall take effect upon its issuance.

Article Five: This decision shall be published in the Official Gazette.
Beirut, October 4, 2022

Governor of the Central Bank of Lebanon
Riad T. Salam