Lebanon’s banks re-open for first time in two weeks
Lebanon fears capital outflows as dollar shortage continues
Lebanese banks have opened for the first time in a fortnight, following weeks of continued protests and unrest. The largest peaceful protests in 15 years have seen the prime minister Saad Hariri resign and the army deploy to the streets of Beirut to quell the threat of sectarian violence.
The protests were triggered in part by a currency crisis. Lebanon is a net importer of goods, dependent on steady financial inflows and a currency (LBP) pegged to the US dollar (USD). The Banque du Liban, the country’s central bank, contributed to a severe dollar shortage earlier this month by using foreign exchange reserves to maintain the currency peg.
The Banque du Liban has pledged not to impose excessive capital controls on citizens and banks.
The Association of Banks in Lebanon maintained that banks would reopen to provide for “pressing and fundamental needs” including salary payments. It further stated: “The association hopes that all bank customers understand the current situation and respond positively to serve their interests and the interests of the country during this exceptional period.”
Citizens rushed to ATM machines during the protests to the point where some have stopped dispensing US dollars.
The protests were initially triggered by proposals for new taxes on tobacco, petrol and online phone calls via services such as WhatsApp but widened in general opposition to the government’s corruption and incompetence.
The state of Lebanon’s economy has worsened in recent years. Its debt-to-GDP ratio is the highest it has been since the 2008 financial crisis at 151 per cent while its GDP-per-capita for 2019 is the lowest since the crash.
As well as marching against austerity and sectarianism the protesters have called for the country’s banks to operate with greater transparency. On October 22 protesters in the second largest city, Tripoli, marched from Al Nour Square towards the Central Bank calling for change.
As well as trying to withdraw US dollars some Lebanese protesters have turned to cryptocurrencies. The notable Lebanese-American writer Nassim Nicholas Taleb tweeted the following: