BDL Issues Circulars Related to Provisioning Banks and Financial Institutions Subsidized Trade Finance Transactions and to Withdrawals of USD Deposits

The Central Bank of Lebanon (BDL) issued a new Circular 573 on 9 October 2020; an amendment to the previously issued Circular 561 on 8 June 2020.

Circular 561, aims to modify several trade conditions in order to ease the process of LC transactions and provide banks and Financial Institutions (FIs) with import LC facilities. Circular 561, first explains that BDL is willing to provide banks and FIs with 90% of the value of invoices related to the import of petroleum commodities, and 85% of the value of invoices related to food necessities such as wheat, medicine and milk for new-borns. Second, importantly, BDL specifies that these facilities are strictly eligible for goods of local consumption and upon the need of the Lebanese market. Third, BDL requires banks and FIs to present all the necessary documents such as invoices, Bill of Lading and payment details to the Treasury and Foreign Exchange department at BDL after the bank has confirmed that all goods are not subject to international or national sanctions and that all documents are valid and legal. Failure to following these measures will subject banks to punitive measures, paying 50% of the respective amount or deposit double the amount as reserves at BDL. It is worth mentioning that BDL considers all invoices pertaining to goods imported within 300 days of arrival as valid. Moreover, upon approval, BDL transfers the related amount of every invoice to the current account of the specified bank and then to the clients’ accounts.

Circular 573, adds to the previous circular that the client is eligible to provide the bank with the respective amount of the invoices in Lebanese pounds (LBP) at the USD exchange rate of 1507.5. In turn, banks are responsible to deposit these amounts as Banknotes at BDL so as to provide the clients with the foreign currency needed for the import transactions.

In addition, Circular 572 dated 9 October 2020, explains that clients holding US Dollar deposit accounts and are intending to debit their account, would be able to settle the transaction at the equivalent rate in LBP available on the Electronic Platform, currently at LBP 3,900 per US Dollar, and in conformity with the BDL limits, to an extended period ending on 31/3/2021.

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