Lebanese parliament to review long-awaited capital control law
Banks have imposed informal capital control laws since the 2019 economic and currency collapse, denying Lebanese people access to their savings
By News Desk - March 27 2022

(Photo credit: AFP)

The Lebanese parliament will review a draft capital control law on 28 March and, if the text is agreed upon, be put to a vote the next day, two lawmakers told Reuters on 26 March.

The long-awaited capital control law comes as Lebanese banks issued informal capital control policies against average depositors, following the 2019 economic and currency collapse.

Reuters reported that some lawmakers had reservations about certain aspects of the law, but had agreed that a law is needed to establish stability and uniformity in the banking sector.

On 26 March, Deputy Prime Minister Saade Chami issued a statement saying that the International Monetary Fund (IMF) had provided their comments and opinions on the draft law.

Lebanon is currently in negotiations with the IMF in hopes of a financial rescue package. However, the strict terms of the IMF loans may erode the sovereignty of Lebanon and increase austerity measures, which will affect Lebanese citizens who are struggling with increased unemployment, hyperinflation, as well as fuel and food shortages.

The major Lebanese banks, including the Central Bank of Lebanon, are under investigation for the illicit transfer of billions of dollars abroad.

The Lebanese judiciary froze the assets of major Lebanese banks and banned their executives from traveling outside the country.

Central Bank Governor Riad Salameh was charged with illicit enrichment, along with his brother Raja.

Previously, a warrant for Riad Salameh’s arrest was carried out, but Internal Security Forces reportedly interfered, protecting Salameh from being captured at the last minute, a move likely caused by the direct intervention of US ambassador to Lebanon Dorothy Shea.

Lebanese Prime Minister Najib Mikati, himself charged with illicit enrichment in 2019 along with Bank Audi, showed support for the controversial Central Bank governor who is also under investigation for embezzlement in several European countries.

Depositors who owned foreign currency denominated accounts in Lebanese banks have not been able to access most or even all of their funds since 2019, when the banks implemented informal capital control laws.

Depositors, at best, could only withdraw very small amounts of foreign currency per month, or settle for converting their foreign currency into Lebanese liras at an exchange rate far below the black market value, thus decimating the value of their life savings.

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