BEIRUT: Mock Lebanese banknotes bearing only zero digits and reading “Bank of Dreams” are seen at an art installation titled ‘Menhara’ (collapsed) by Lebanese artist Carlo Kassabian, reflecting on the currency devaluation, at a club in Beirut on May 8, 2021. – AFP

BEIRUT: Lebanon’s central bank on Sunday announced a “conditional” plan that would allow depositors, hit by strangling financial restrictions, to access part of their foreign currency savings stuck in Lebanese banks. Lebanon is in the grips of its worst economic crisis since the 1975-1990 civil war, and more than half of the population is now in poverty.

The Lebanese pound, officially pegged to the dollar at 1,507 since 1997, has lost more than 85 percent of its value against the greenback on the black market. Since Autumn 2019, banks have largely prevented ordinary depositors from accessing their dollar savings or transferring them abroad, forcing them to resort to the black market to obtain foreign currency.

Holders of dollar accounts have only been able to access their money by exchanging it into the local currency at a rate of 3,900 to the greenback. The dollar is currently trading for more than 12,500 pounds on the black market. The central bank said Sunday it was negotiating “a mechanism (with Lebanese lenders) under which the banks would begin to gradually give (clients) access to their deposits… in all currencies.”

The institution is mulling a plan that would involve banks “paying (savers) sums of up to $25,000 in US dollars or any (other) foreign currency along with its equivalent in Lebanese pounds,” the statement added. It did not specify the exchange rate for amounts converted to the local currency. The central bank said the plan would “begin from June 30” and be spread out over an unspecified period of time, but would be applied “on condition of obtaining legal cover”.

A central bank source told AFP that this meant “the adoption by parliament of a law on capital controls”. Draft legislation on capital controls has long remained a dead letter. Lebanon’s government stepped down after a massive blast at Beirut’s port in August last year, but deeply divided politicians have been unable to form a new cabinet. Two associations said this week they had filed a legal complaint against central bank governor Riad Salameh, whom they accuse of fraudulently amassing a large fortune in Europe. – AFP