(Bloomberg) -- Lebanon’s central bank will reduce interest rates on credit and debit balances and is considering formalizing restrictions on the movement of capital set by local lenders, including limits on transfers abroad and cash withdrawals.
Governor Riad Salameh told the Association of Banks in Lebanon that he will issue within days a circular that would cut interest rates “to revive the economy on one hand and limit the rise of doubtful debts, which are increasing with the rise of lending cost,” according to a document seen by Bloomberg on Tuesday.
Salameh also said he was looking into issuing instructions that would make recent restrictions imposed by lenders formal policy. The measures would be temporary until a new government is formed and the financial and economic situation returns to normal, the document stipulated.
Lebanese banks imposed caps on withdrawals in dollars and banned most transfers abroad to prevent a run on lenders as the country faces one of its worst financial crises in years and nationwide unrest. The restrictions were put in place since Oct. 17, when protests erupted and brought down the government of Prime Minister Saad Hariri.
In the document, the governor also said that some 165 billion Lebanese pounds ($109.2 million) were withdrawn per day from the central bank in the last two months, and that the bank is waiting for a new batch of pound banknotes to arrive on Dec. 20.
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