Restrictions imposed on taking dollar cash out of Lebanon

Protests over economic stability have led to fears there will be a run on banks

                                

Traders and money exchangers have been banned from taking “significant amounts” of US dollars out of Lebanon. Normally large sums of the currency can be taken out of the country as cash by those with an ordinary permit from customs authorities.

This new order, imposed on October 27, enforces the ban until the central bank has worked out a new mechanism for regulating such transfers, said the state news agency.

The move was prompted by 11 days of nationwide protests concerning Lebanon’s economic stability – it is one of the world’s most heavily indebted states – which led to banks having to close for eight working days.

The state has said the banks will remain closed until stability is restored. The fear is that the unrest would prompt a rush to withdraw savings when they reopened, depleting foreign currency deposits.

For now, currency exchangers must either be licensed by the central bank to move funds, do it through licensed companies or apply for a licence.

The country needs capital inflows to finance the state deficit and pay for imports. These, though, have been slowing down which has led to the emergence of a parallel market for dollars, to which the Lebanese pound is pegged.

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