In line with the Minister of Finance’s decision promulgated in October 2022, BDL announced yesterday the change of Lebanon’s official exchange rate per USD from 1,507 LBP to 15,000 LBP, effective 1/2/2023. This 10-fold increase comes after adopting the old exchange rate for 28 years (starting in 1997). The change is in accordance with articles 75 and 83 of the Law of Money and Credit. Interestingly, the change didn’t come with new accompanying circulars to regulate its application, especially as far as which exchange rate to use in the payment of loans back to banks.
On a different note, BDL issued Intermediate Circular 659 on 20/1/2023 that amends basic decision number 6568 on Banks’ FX position and basic decision number 6939 on Banks’ capital requirement. In details, the Circular’s articles stated as follows:
1) Banks are required to settle their indebted FX positions as of 31/12/2022 over a five-year period starting in 2023 and ending in 2027, at 20% each year.
2) No dividend distribution in 2019, 2020, 2021, and 2022.
3) Banks can add to their Tier 1 capital 50% of the revaluation in real estate assets they own or they have shares of in real estate companies and in the long-term investment that banks made in financial institutions abroad and were approved by BDL. The revaluation has to be approved by BDL and has to be completed by 31/12/2023.
4) The revaluation has to be undertaken in fresh USD and valued in LBP at the Sayrafa exchange rate as it is set at the end of December in each year of the five-year period.