thearabweekly.com — LONDON – Lebanon has moved to combat “capital flight” after it emerged that $1 billion has already been transferred out of the country despite restrictions on withdrawals. According to local reports, Lebanon’s central bank informed local lenders to settle debt securities and Certificates of Deposit in client accounts, part of emergency measures to put a lid on capital flight from the protest hit country which is facing increasing liquidity problems. In an internal circular issued on January 30 and effective for six months, banks in Lebanon are ordered to settle the value and interest of debts, Bloomberg reported. The move comes as part of a broader move to ensure sufficient financial liquidity in Lebanon. Banking restrictions already ban most transfers abroad and limit dollar and local-currency withdrawals.
Despite such measures, Lebanon Central Bank governor Riad Salameh revealed that significant capital had been transferred out of the country over the past few months. “Of the $1.6 billion that was withdrawn (from the Lebanese banking sector) between October 17 and the end of the year… one billion dollars were transferred abroad by Lebanese,” Salameh said on January 30 in an interview with France 24. The remaining $600,000 that was withdrawn from Lebanese banks during this period were capital deposits held by foreign banks, Salameh added. Salameh announced an investigation into how so much money was transferred, but acknowledged that results would “take some time” He also acknowledged there had been reports that “politicians, senior civil servants and bank owners” were involved in capital flight but called on observers to wait for the investigation’s report. Questions about who was transferring money abroad and how are being raised after a report by the Carnegie think tank in November revealed that nearly $800 million left Lebanon between October 15 and November 7. During this period, the vast majority of Lebanese could not access their funds because banks were closed due to anti-corruption protests.
