The Lebanese Central Bank issued on September 30, 2019 intermediate circular no. 530 addressed to banks concerning documentary credits opened at banks for the import of fuel or medicine or wheat. The purpose of this circular is to ease the pressure on USD liquidity in the banking amid such harsh economic conditions and to regulate the import activity of some basic goods and ensure they are to be consumed locally. In details, the circular stipulates that banks opening documentary credits for the import of the aforementioned products can request the Central Bank to secure the amounts of said documentary credits in USD in the event the following conditions are met:

-       Banks must open special accounts at BDL for every documentary credit transaction

-       Banks must provide the Central Bank with a copy of all the documents related to the transaction such as the documentary credit policy and the documentary credit agreement signed by the bank and the client

-       Banks should, and for every documentary credit transaction, deposit at a special account at BDL at least 15% of the total value of the documentary credit in USD and 100% of its value in LBP. In this regard, the bank can request the Central Bank to convert the deposited LBP amount into USD, on the condition that the converted amount remains in the account for a certain period of time.

-       Banks must pay the Central Bank a commission of 0.5% for each transaction

-       Banks must and at their own responsibility ensure that the documentary credits subject to this circular are strictly for the import of fuel or medicine or wheat for local consumption

It is worth highlighting that the deposited amounts at BDL will be interest bearing and that BDL will secure the value of the documentary credits in USD only on the maturity date of the transaction.