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Lebanon banks warned on closure if paralysis of government persists

Bloomberg/Beirut

Wednesday، 15 January 2020 12:24 AM

Lebanese banks are at risk of having to close if the executive authority remains paralysed amid a deepening financial and economic crisis that’s already seen lenders impose measures to restrict the movement of capital.
“The situation is dangerous and cannot continue as such without an executive authority, and we might reach a point where we are forced to close,” MTV television reported yesterday, citing Lebanon’s union of bank employees.
Politicians have struggled to form a new government in the months since protests brought down the cabinet of Prime Minister Saad Hariri in October. Lebanon’s president named Hassan Diab, an academic and a former education minister, to form a new cabinet yet disputes among officials have delayed the process.
Diab has insisted on a government of experts to help the country manage its crisis while the president and his allies insist on naming ministers with political background.
Some politicians have demanded that Hariri convene the government in his caretaker capacity.
Lebanese lenders have tightened restrictions on US dollar withdrawals and transfers abroad since protests erupted against the government’s decision to raise fees and taxes.
The central bank has also been rationing foreign currency and using its dwindling reserves to cover the import of essentials such as fuel and pharmaceuticals. The measures have forced traders to turn to money changers to meet their dollar needs, creating a parallel rate higher than the fixed exchange regime.
Violence has been reported on several occasions against lenders, with some people smashing ATM machines, storming into banks and holding sit-ins at branches.

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