London
Bankers and analysts have voiced scepticism about attempts by Lebanon’s central bank to clean up the country’s banks, warning they must form part of a wider rescue plan to fix its broken financial and economic system.
The central bank told domestic banks to raise fresh capital, urge their big depositors to move funds back to the country and provision for a 45% loss on their Eurobond holdings.
The move follows a further downward spiral in Lebanon’s fortunes since an explosion this month at Beirut’s port. Even before the blast, which led to the government’s resignation, Beirut was grappling with its worst financial crisis in the wake of protests and a default on its foreign currency debt in March.
“These ad-hoc policy decisions will add to Lebanon’s credit and banking woes and risk undermining the little progress made in talks with the IMF,” said Alia Moubayed.
