The State of the Lebanese Pound

I

illusion84

Member
Money is gone. All what BDL did is gave the banks a higher margins. They are giving on USD 5% and taking 15% from businesses and. That is a pure 10% profit for them. This is how they are panning to make part of the money back! Lending and fixed term deposit interest rates are usually connected. If one goes up, the other does the same and if one goes down the other does the same as well. Only in bankrupt and crooked Lebanon, the central intervenes in the favor of the banks instead of the ppl!!!

Bas mossriyetna wein? tens of billions of dollars ; what did BDL do with them? waynon? It is that they are not in the Banks; if not Hariri would not beg foreign countries to help us with Food and basic goods!
 
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  • SoFP1

    SoFP1

    The Chosen One
    Orange Room Supporter
    Bas mossriyetna wein? tens of billions of dollars ; what did BDL do with them? waynon? It is that they are not in the Banks; if not Hariri would not beg foreign countries to help us with Food and basic goods!
    As Wiaam Wahab says..Karatouwon!
     
    dyyyy

    dyyyy

    Well-Known Member
    Whenever you have something urgent to do with your money

    جمعية اصحاب الودائع المصرفية
    They provide free lawyers


    ذه المجموعة مخصصة لجميع الاشخاص اللبنانيين والاجانب الذين يعانون من احتجاز اموالهم في المصارف.
    الفريق القانوني للمجموعة يعمل على تقديم الارشادات القانونية لتحصيل الودائع.
    يمكنكم التواصل عبر 71119798
    او من خارج لبنان 0096171119798

    This group is dedicated to all Lebanese and foreign people who suffer from the detention of their funds in banks.
    The Group's legal team provides legal guidance for the collection of deposits.
    You can contact 71119798
    Or from outside Lebanon 0096171119798
     
    dyyyy

    dyyyy

    Well-Known Member
    Bas mossriyetna wein? tens of billions of dollars ; what did BDL do with them? waynon? It is that they are not in the Banks; if not Hariri would not beg foreign countries to help us with Food and basic goods!
     
    ّTelefon Kasse

    ّTelefon Kasse

    Member
    فعلا أوسخ من هيكّ أذلال للمواطن اللبناني بعدّ ما صار واحد بيشتغلّ شقاء عمره وآخرّ شيء بيصادروا أمواله بشخطة قلمّ- هيدول راس الأفعى اللي لازم ياكلوا قتلّ لأنهم بيشتغلوا عندّ أميريكا كلّهم
    المفترض ينعملّ أحطياطي ذهب لخزينة الدوّلة تحت حراسة مشددة من الحرسّ الجمهوري ضمن الأراضي اللبنانية بالتوازي مع الأحطياطي الموجود أصلا في أميريكا وسويسرا منعا لتكرار هذه المأسة في المستقبل
     
    SoFP1

    SoFP1

    The Chosen One
    Orange Room Supporter
    How to sue these banks outside lebanon ?
    File a lawsuit wherever you are. The lawyers will take care of it. They have to pay. Especially if you are a creditor.
     
    HalaMadrid

    HalaMadrid

    Active Member
    Orange Room Supporter
    Really interesting. Puts the trigger of the crisis at the Nov. 2017 Hariri resignation:

    Understanding the Lebanese financial crisis
    Print this page32


    DECEMBER 20 2019
    By: Guest writers
    © REUTERS
    This is a guest post by Fadi Hassan, a research associate at the Center for Economic Performance at the London School of Economics and Ugo Panizza, a professor of economics and the Pitchet chair in finance and development at the Graduate Institute in Geneva. Panizza is also the Vice President of the Centre for Economic Policy Research. The authors spell out the challenges facing Lebanon as its political establishment tries to stop a spiralling financial crisis which has seen depositors lose access to dollar balances.
    Lebanon, a politically troubled but upper middle-income Middle Eastern state, is in the midst of a deep financial and political crisis. Banks have been intermittently closed since mid-October and depositors across the country are finding it impossible to gain access to dollar balances.
    While capital controls have not officially been introduced, it seems banks have taken it upon themselves to conserve liquidity and capital by dictating what level of funds clients can withdraw or transfer abroad. Dollar scarcity has led to a 30 per cent premium for physical cash dollars over the official exchange rate. (The economy is both highly dollarised and cash-oriented).

    On December 12, Prime Minister Saad Hariri, who is currently serving as caretaker leader following his resignation on October 29, was forced to ask the IMF and the World Bank for assistance.
    So how did this situation come to pass?
    Lebanon has a long history of high public debt and external imbalances that dates back to the post-civil war reconstruction period of the 1990s. While a series of donor conferences, co-ordinated by then French president Jacques Chirac over 2001-2007, pledged substantial financial assistance, it never managed to restore fiscal and external sustainability, as can be seen in the these two charts:

    What’s clear in retrospect is that the period immediately following on from the global financial crisis of 2008 — when about $30bn of capital (around 100 per cent of GDP at that time) flew into Lebanon — was rendered a wasted opportunity to turn things around.
    The majority of the inflows resulted from the repatriation of foreign assets in the context of low global interest rates. While the central bank of Lebanon (the Banque du Liban, known as the BdL) used part of these inflows to beef up its reserves, about one-third ended up financing the expansion of an already large current account deficit. More than half of the expansion in the current account deficit, meanwhile, was linked to an increase in primary (net of interest) government expenditure. Inflows also led to a burst in inflation, which peaked at 10 per cent in 2008, and to a real appreciation of the Lebanese pound.
    In that context, high nominal growth led to a reduction of the debt-to-GDP ratio, but much more could have been done to use the favourable global conditions to improve Lebanon’s fiscal accounts, and to channel productive investments into the country that could stimulate long-term growth.
    Instead, the capital inflows of 2008-2009 saw the central bank become overly obsessed with the sanctity of foreign currency. Soon enough, foreign reserves became the be-all-and-end-all of all policy, with the central bank going into panic mode if and when reserves began declining even slightly — despite them remaining well above pre-crisis levels.
    A reserve Ponzi in the making
    The simultaneous desire to keep reserve levels high and to bail out troubled banks eventually led to the implementation of unconventional - and controversial — financial engineering policies. These included the provision of subsidies to commercial banks that were willing to increase dollar deposits at the central bank. Such policies introduced large fiscal costs. But they also, in other respects, resembled a Ponzi scheme since the central bank was paying ever higher interest rates to attract dollar funds, even though those funds were not generating sufficient returns to repay the interest and capital.
    As the IMF noted:
    ...for each new deposit at the BdL in USD, a bank would earn a 6.5 percent interest in USD and in addition have an opportunity to borrow a slightly larger amount in LBP at 2 percent and redeposit it at the BdL at 10.5 percent for 10 years.
    Paradoxically, the attempt to protect gross foreign reserves then led to a large reduction of the central bank’s net reserves (ie, total foreign reserves minus gross central bank FX liabilities, adjusted for the Lebanese pound-denominated monetary base) which, according to credit rating agencies, are now negative to the tune of 100 per cent of GDP.
    While it’s true the war in Syria, which started in 2011, put a strain on the Lebanese economy, it’s unlikely it was the root cause of the financial crisis. The war’s effects were mainly on Lebanese exports as well as on immigration (Lebanon has received more than 1m Syrian refugees since the beginning of the war.)
    In 2013, the World Bank estimated the war’s total fiscal cost of refugees amounted to some $2.6bn, a figure more than offset by the $8.1bn in development aid disbursed to Lebanon over 2012-18 relative. To compare, it had $3.9bn received in aid between 2006-11. Moreover, rather than observing a negative financial shock, the start of the war coincided with another acceleration of capital inflows, driven by $13bn worth of foreign asset repatriation by residents over 2012-14.
    The Hariri-Saudi Arabia moment
    More likely, the trigger for the current crisis was instead the mysterious resignation and disappearance of Prime Minister Hariri in Saudi Arabia in November 2017, which may have spooked wealthy Lebanese depositors and encouraged them to move funds out of Lebanon. The strange incident saw Hariri publicly resigning from his position in a televised statement from Saudi Arabia on November 4, 2017. After the appearance he could not be traced for more than 10 days, sparking fears he was being held hostage by the Saudi leadership. Eventually, thanks to the intervention of French president Emmanuel Macron — which saw the French leader officially invite Hariri to France — Hariri re-emerged and was able to return to Lebanon, where he immediately rescinded the resignation and was reinstated as prime minister.
    It was after this series of events, as can be seen in the below charts, that resident bank deposits truly collapsed, interest rates spiked, bank lending to the private sector declined and GDP growth dropped to 0.25 per cent. The IMF Article IV Report covering 2017-18 has never been released to the public (probably because the Lebanese authorities did not agree to its publication, a fairly rare event). However, it is clear from the below data sourced from BdL statistics that the increase in interest rates only further deteriorated the fiscal situation. Things then properly fell apart with the collapse of foreign deposits in early 2019:

    What’s the way out of the crisis?
    The economic reform package put together by the national unity government — formed in early 2019 by a coalition of all the main political parties (which besides having different political ideologies also represent different religious groups) — was perceived as punishing for ordinary citizens, without dealing with the endemic corruption that benefits the political and economic elites. On October 17, reports of a possible tax on internet-based call services became the straw that broke the camel’s back, leading to street protests and bank closures.
    Since the fiscal and external situation remains unsustainable, some sort of haircut or restructuring will be needed to curb the crisis. But any such solution will be difficult and painful. It is paramount therefore for policies to be perceived as fair by all the various stakeholders, especially given Lebanon’s many economic, social, and religious cleavages.
    While currency depreciation is often a good solution for restoring external sustainability, this is not advisable in Lebanon for at least two reasons. First, Lebanon has almost no export sector so any currency adjustment would have to be accompanied by an import contraction. This would incur dire consequences for the most disadvantaged economic groups. Second, Lebanon’s exposure to dollar debt means depreciation would further deteriorate the fiscal situation and also have negative balance sheet effects for the private sector. Import taxes on luxury goods are probably a wiser option.
    Equally, because Lebanon’s primary deficit — the total government deficit excluding interest payments on public debt — is low, a well-designed reprofiling of the public debt (ie a lengthening of the maturity at lower interest rates without a face value reduction) could go a long way in restoring fiscal sustainability. However, the banks hold large amounts of government debt and would suffer from such action. While a haircut on depositors may be necessary it is important not to continue to bail-out bank shareholders. Furthermore, it’s important that all depositors be treated equally.
    While many ordinary citizens have lost full access to their bank accounts, some well-connected depositors have been able to move their funds abroad. Accordingly, to really be effective and fair, the haircut on bank deposits would have to be applied on balances before banks started imposing limits to withdrawals, and possibly exempt small depositors to compensate for this unfair treatment.
    The key question, however, is who is going to do all this? The Lebanese population has lost trust in its political elite. And yet, this painful programme needs to be implemented transparently by a trusted government.
    It also has to be implemented soon. If any specific group was to be given an easier ride than others, this could dramatically destabilise an already complicated political equilibrium.
    While we would like to be optimistic, we are fearful that until a government that holds the full trust of the Lebanese people emerges, things could get worse.
    Copyright The Financial Times Limited 2019. All rights reserved. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.

     
    Chanklish

    Chanklish

    Well-Known Member
    even if they fix the economy some or most if not all of our deposits are gone
     
    Chanklish

    Chanklish

    Well-Known Member
    Is that different than JP Morgan chase Manhattan bank?
    the USA can print dollars .. Lebanon cant
    we are already living in a mini capital control .. soon comes the haircut
     
    dyyyy

    dyyyy

    Well-Known Member
    even if they fix the economy some or most if not all of our deposits are gone
    There is a solution, and this is the haircut, taking from the rich the excess of money they got from interests.

    A Lebanese who deposited $10 million 10 years ago, at 12%, holds $31 million today. With a 50% haircut, they would have $15.5 million, a quite reasonable return of 4.5%.

    The problem is now they're doing the exact opposite, they're squeezing the little guys tp retrieve their USD in LBP at the rate of 1500, which is effectively making these people pay the 30%

    Even though withholding money from depositors is completely illegal, and making a haircut on the people who froze their accounts is completely legal and logical (The guy who was earning 12% interest was earning it because he accepted to take the risk.)

    It's important to know that it's not just a disaster that happened and we have to deal with it, the solution exists but the problem is they're still handling it in a way to take money from the people while keeping their profits untouched
     
    Chanklish

    Chanklish

    Well-Known Member
    There is a solution, and this is the haircut, taking from the rich the excess of money they got from interests.

    A Lebanese who deposited $10 million 10 years ago, at 12%, holds $31 million today. With a 50% haircut, they would have $15.5 million, a quite reasonable return of 4.5%.

    The problem is now they're doing the exact opposite, they're squeezing the little guys tp retrieve their USD in LBP at the rate of 1500, which is effectively making these people pay the 30%

    Even though withholding money from depositors is completely illegal, and making a haircut on the people who froze their accounts is completely legal and logical (The guy who was earning 12% interest was earning it because he accepted to take the risk.)

    It's important to know that it's not just a disaster that happened and we have to deal with it, the solution exists but the problem is they're still handling it in a way to take money from the people while keeping their profits untouched
    when did the rich pay or sacrifice anything for the sake of the poor in Lebanon ? we are dreaming
     
    I

    illusion84

    Member
    There is a solution, and this is the haircut, taking from the rich the excess of money they got from interests.

    A Lebanese who deposited $10 million 10 years ago, at 12%, holds $31 million today. With a 50% haircut, they would have $15.5 million, a quite reasonable return of 4.5%.

    The problem is now they're doing the exact opposite, they're squeezing the little guys tp retrieve their USD in LBP at the rate of 1500, which is effectively making these people pay the 30%

    Even though withholding money from depositors is completely illegal, and making a haircut on the people who froze their accounts is completely legal and logical (The guy who was earning 12% interest was earning it because he accepted to take the risk.)

    It's important to know that it's not just a disaster that happened and we have to deal with it, the solution exists but the problem is they're still handling it in a way to take money from the people while keeping their profits untouched
    You can't think about it that way!
    I know many rich people that can easily make 15% to 20% profit doing their business.

    They decided to come back to Lebanon as 12% interest rate is attractive and they can get an early retirement with that.

    Taking their money now is basically robing them!

    It is not their fault that the lebanese state failed to invest these money in productive projects! and waisted it over wages; electricity and corruption!

    You should look at those who took the money and distributed it over their followers and their corrupt business partners! If you want to fight corruption you start with the corrupt not with expatriate that came and put their fair earned money in the Lebanese system!

    If done you'll never see a dime again and at the first chance the expatriates will take their money back to the outside.
     
    Chanklish

    Chanklish

    Well-Known Member
    the new lebanese lira banknotes have arrived .. you gotta love inflation
     
    dyyyy

    dyyyy

    Well-Known Member
    You can't think about it that way!
    I know many rich people that can easily make 15% to 20% profit doing their business.

    They decided to come back to Lebanon as 12% interest rate is attractive and they can get an early retirement with that.

    Taking their money now is basically robing them!

    It is not their fault that the lebanese state failed to invest these money in productive projects! and waisted it over wages; electricity and corruption!

    You should look at those who took the money and distributed it over their followers and their corrupt business partners! If you want to fight corruption you start with the corrupt not with expatriate that came and put their fair earned money in the Lebanese system!

    If done you'll never see a dime again and at the first chance the expatriates will take their money back to the outside.
    Yes I totally agree with you, and I hope this happens, at least if these amounts are difficult to track we cal hold the owners and CEOs of these banks accountable for what they've done.


    I just meant in my post that normally their is a procedure when banks go bankrupt and we shouldn't accept what is happening now as if it's an act of god and we can't do anything about it, this is outrageous.
     
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