Lebanon

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Lebanon's government foresees cancelling "a large part" of the Central Bank's foreign currency obligations to commercial banks and dissolving non-viable banks by November, according to a financial recovery plan passed by the cabinet on Friday, Reuters reported. The document, seen by Reuters and verified as accurate by a minister, was passed by cabinet in its final session hours before losing decision-making powers, following the election of a new parliament on May 15.
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The Association of Banks in Lebanon said on Saturday it “completely rejects” the government’s latest draft of a financial recovery plan meant to pull the country out of an economic meltdown, Reuters reported. In a statement shared with Reuters, the ABL called the plan “disastrous” and said it would leave banks and depositors shouldering the “major portion” of losses. The government estimates that the financial sector's losses amount to $72 billion.
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Lebanon and the International Monetary Fund on Thursday reached a tentative agreement on comprehensive economic policies for the crisis-hit country that could eventually pave the way for some relief, unlocking billions of dollars in loans, the Associated Press reported. The four-year agreement, which is subject to approval by IMF management and executive board, was announced by Lebanese Prime Minister Najib Mikati after a meeting with IMF delegates in Beirut. He said Lebanon promised the IMF that Beirut would implement wide-ranging reforms in the small nation notorious for corruption.
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Lebanon may be closer than ever to breaking a two-year deadlock in talks with the International Monetary Fund, a senior official said, a step that could help draw a line under one of the world’s worst financial crises in over a century, Bloomberg News reported. The economy is in the grip of hyperinflation with the currency in freefall after the government defaulted on over $30 billion in international debt.
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Authorities in three European countries have frozen more than $130 million in assets linked to an investigation into money laundering in Lebanon, a European Union agency said Monday, the Associated Press reported. The measures taken by officials in France, Germany and Luxembourg come as Lebanon grapples with a devastating economic crisis and coincide with domestic and European investigations of its longtime central bank governor, Riad Salameh.
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A delegation from the International Monetary Fund will start talks in Lebanon on March 29, Prime Minister Najib Mikati said on Saturday, expressing hope of a deal in the coming weeks, Reuters reported. "Next Tuesday they will start their mission in Lebanon," he told reporters on the sidelines of the Doha Forum in Qatar. "Hopefully ... by the end of two weeks we will see the light," Mikati said. The Lebanese pound has lost more than 90% of its value since 2019, when the financial system collapsed, plunging the majority of Lebanese into poverty, according to UN agencies.
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When a Lebanese bank told Aref Yassin it had closed accounts worth $20 million belonging to the professional syndicate he heads and issued a cheque for the balance that was worth a fifth of its face value, he took the matter to court, Reuters reported. The money, saved from engineers' subscriptions and deposited at Fransabank, was earmarked for healthcare and pensions covered by the syndicate for about 100,000 people who now face losing a lifeline in a country in the third year of an economic meltdown.
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The International Monetary Fund said on Friday it would remain "closely engaged" with Lebanon's authorities to help the crisis-ravaged country formulate an economic reform programme, Reuters reported. Lebanon's financial system unravelled in late 2019 under the weight of huge public debts, slicing more than 90% off the local currency's value and plunging a majority of the population into poverty.
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A government plan for tackling Lebanon's financial crisis projects a 93% devaluation of the Lebanese pound and converts the bulk of hard currency deposits in the banking system to local currency, according to a blueprint seen by Reuters. Of $104 billion of hard currency deposits, the plan foresees returning just $25 billion to savers in U.S. dollars, with most of what's left converted to pounds at several exchange rates, including one that would wipe 75% off some deposits. The plan sets a 15-year timeframe for paying back all depositors.
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Lebanon's currency has lost more than 15% of its value since the start of the year, piling further pressure on the population more than two years into a crisis that has plunged many into poverty and fuelled demonstrations, Reuters reported. Protesters took to the streets in several areas of the country on Monday night, burning tires and voicing anger at the dire economic situation amid political deadlock. Cars queued at fuel stations to fill up before another expected rise in prices.
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