Lebanon to finally implement official capital controls

Any fresh dollars, however, can still be used freely to withdraw or transfer abroad.
by Georgi Azar

23 May 2020 | 21:07

Source: by Annahar

  • by Georgi Azar
  • Source: Annahar
  • Last update: 23 May 2020 | 21:07

Anti-government protesters break a bank security camera as other smashes the widows, during ongoing protests against the Lebanese central bank's governor and against the deepening financial crisis, at Hamra trade street, in Beirut, Lebanon, Tuesday, Jan. 14, 2020. (AP Photo).

BEIRUT: Lebanon is set to pass the long awaited capital controls law months after banks began limiting both withdrawals and transfers abroad.

The piece of legislation came to fruition after the Free Patriotic Movement and Amal Movement agreed on a draft law.

The draft law may be approved during a legislative session on Thursday after consultations with the International Monetary Fund over the course of next week.

Banks started implementing de facto capital controls over six months ago as nationwide political unrest coincided with a loss of confidence in the sector.

Depositors flocked to their banks in attempt to withdraw their savings only to be rebuffed.

“It’s great that they’re passing this law, finally, but the question remains why it took more than 6 months ... and what happens to people, especially PEPs, who were capriciously allowed to exit through “Super-Wasta” prior to passing this law? Did they get away with it,” financial expert Dan Azzi told Annahar.

Barring any amendments, the law will limit all transfers abroad to medical or education expenses, as well as payments to settle rent.

It will also include exceptions for any taxes or mandatory payments by foreign authorities, according to copies obtained by Annahar.

Transfers to secure “raw materials or any medical, technological or industrial equipment” will also be exempt.

According to the latest draft, transfers will be capped at $50,000 per year per individual. Any fresh dollars, however, can still be used freely to withdraw or transfer abroad.

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