Lebanon's Central Bank announced Sunday that it will launch- on the condition that it obtains the necessary legal coverage- a mechanism that allows holders of bank accounts in foreign currencies to gradually withdraw part of their money that has been pending in the country's banks since the fall of 2019.

The Banque du Liban said in a statement that it “is currently negotiating with Lebanese banks with the aim of adopting a mechanism whereby banks begin to gradually pay off deposits that existed before October 17, 2019 and as they became on March 31, 2021, in all currencies.”

For a year and a half, Lebanon has been witnessing an unprecedented economic and financial crisis, a scarcity of liquidity in dollars and a record deterioration in the value of the national currency.

After gradually lowering the ceiling for cash withdrawals in dollars and banning transfers abroad, Lebanese banks, as of March 2020, stopped all withdrawals in foreign currencies.

Holders of dollar deposits can only make cash withdrawals by converting them into Lebanese pounds at an exchange rate much lower than those traded on the black market.

Currently, the dollar exchange rate on the black market exceeds 12,500 pounds, the exchange rate in banks is 3900 pounds, and the official exchange rate is 1507 pounds.

This financial crisis affected especially those with small and medium deposits.

In its statement, the Banque du Liban announced that it had requested “from the banks to provide it with the data to build upon a plan whereby sums amounting to 25,000 US dollars would be paid, in US dollars or any foreign currency, in addition to what is equivalent to it in Lebanese pounds." It did not specify what rate would be used for the additional amount. 

The Lebanese Central Bank added that according to the mechanism, "these sums will be paid in installments over a period of time to be determined by the Central Bank of Lebanon soon. It is expected that the payment will start from June 30, 2021, subject to obtaining legal coverage."

A source in the Banque du Liban told Agence France-Presse that what is meant by legal coverage is "the parliament's adoption of the Capital Control Law," meaning capital control.

The socio-economic conditions in Lebanon have been deteriorating since August 2020. More than 50 percent of the Lebanese people are below the poverty line, while the rate of inflation exceeded 140 percent in 2020.