Lebanon Businessnews News
 

Central Bank to provide
dollars for commodity imports
Traders of wheat, medicine, and fuels to benefit from funding
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Banks providing documentary credits to finance the import of wheat, medicine, gasoline, diesel, and butane can ask the Central Bank (BDL) to supply them with the required dollar amounts, according to a new BDL circular.

The banks have to open special accounts at BDL for these documentary credit operations.

They have to deposit 100 percent of the total value of each documentary credit in these accounts in lira in addition to 15 percent of the total in dollars. The lira amounts can be converted into dollars provided they remain deposited in the special accounts for at least 30 days, or until the due date of the financing agreement, or of the bank’s acceptance of the credit, whichever is the longest period.

The banks have to pay BDL a commission of 0.5 percent on each operation. The money deposited in the special accounts will earn the same interest rate that the Central Bank usually pays on deposits.

BDL said in the circular that it will supply the dollar amounts on maturity.

Karim Gebara, Chairman of the Lebanese Pharmaceutical Importers Association said that this is a positive step. Importers will have to secure the funding in advance before the maturity of the invoice and this will weigh heavily on their working capital, Gebara said. In addition to the full amount that must be secured in liras, importers have to provide an additional 15 percent in dollars, he said. According to Gebara, the question now is how the importers are to secure these dollars. Are they going to buy them from foreign exchange dealers at high exchange rates, or borrow them from the banks at high interest rates?

Fadi Abou Chacra, a representative of fuel distributors and an advisor to the Gas Station Owners Association, said that the crucial thing is that this decision is implemented.

Over the last few months dealers who buy wheat, medicine, and fuels in dollars and sell them in liras, were facing challenges in securing enough dollars at the official price from the banks to pay for their purchases. They had to resort to foreign exchange counters where dollar prices hit record highs driven by a surge in demand for the US currency and a decline in its supply. These dealers were suffering losses as they cannot adjust the prices of these commodities because they are regulated by the government.
Reported by Shikrallah Nakhoul
Date Posted: Oct 02, 2019
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