The Lebanese Central Bank issued on June 8, 2020 intermediate circular no. 561 addressed to banks and financial institutions with the purpose of easing the pressure on USD liquidity in the banking sector amid such harsh economic conditions and facilitate the procedure for banks to open letters of guarantee (LGs) related to importing purposes. In details, the circular stipulates that banks can resort to the Central Bank to conduct foreign exchange transactions on behalf of their clients in foreign currency on the following basis:

-       90% of the value of bills dedicated to import oil derivatives (petrol, diesel and gas)

-       85% of the value of bills dedicated to import wheat, medicine, medical supplies, infant formula, and materials used in the production of pharmaceutical drugs

Banks willing to benefit from the provisions of the circular must:

-       Ensure at their own responsibility that the bills will be used to cover the aforementioned items solely for local consumption based on the needs of the Lebanese markets

-       Provide the Central Bank with a copy of the documents related to all of the import transactions including the final import bill with regards to oil derivatives, a certified copy of the import bills by the Ministry of Health with regards to medicinal products, proof of entry of the required products and within the approved quantities (such as “Bill Of Lading” or “Airway Bill”), a copy of the transfer order according to the SWIFT letter, and any other document deemed necessary by the Central Bank

Banks must verify at their own responsibility that the terms of the circular are respected. In this respect, BDL would force banks in violation to:

-       Deposit a minimum private reserve amount at BDL equivalent to double the converted amount at 0% interest rate

-       Pay a penalty equivalent to 50% of the converted amount to be borne by the client

BDL also revealed that non-compliant importers would not be able to benefit from the provisions of the circular in the future.