Lebanon’s Central Bank Bolsters Measures to Defend Ailing Economy
Lebanon's central bank has raised deposit reserve requirements to 15 percent, giving itself more tools to help defend the country's ailing currency, reported the Gulf Daily News.
In a statement published in newspapers Saturday, central bank governor Riad Salameh said banks would also be required to place reserves equivalent to 15pc of the amount of a range of foreign currency holdings, and must maintain reserves equivalent of 25 percent of demand deposits.
The moves were the latest step by the bank to prop up the Lebanese lira, which is under intense pressure as fears mount over the country's ability to service its $25.3 billion public debt, which exceeds 155 percent of GDP.
Currency traders say the bank is typically the only seller of dollars locally, and it has seen gross forex reserves dwindle from the equivalent of $5.9bn at the end of 2000 to around $3.86bn by mid-September.
The central bank does not disclose its net reserves.
Lebanon's government has drawn up a 2002 budget projecting a deficit of 40pc of spending versus 51pc for this year to help arrest the debt, and wants to boost revenue through the imposition of a value-added tax and via state asset sales.
Tension on the country's southern border, where fighters have clashed with Israeli troops and drawn retaliatory air strikes in Lebanon in recent months, also undermines the currency, according to the paper – Albawaba.com
© 2001 Al Bawaba (www.albawaba.com)