Banks

In Lebanon, in the era of cash

At the cash desk of a convenience store in the Furn El-Chebbak district, Bachir takes a wad of Lebanese books out of his backpack and carefully counts the amount required to pay for his weekly shopping. “Three days to raise one million pounds (€37.55), and that’s it”he said, handing a dozen notes to the cashier, who only accepts cash. Every month, Bashir competes in patience to withdraw his salary as an employee from his bank because, due to a lack of cash, the establishment no longer delivers the banknotes to him except in dribs and drabs. “They won’t let us take it out in full. I didn’t steal it, though! »he says, exasperated.

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In Lebanon, the national currency has been pegged to the dollar since 1993. While the pound has depreciated by almost 90% in two years, checks and bank cards are no longer popular, because the Lebanese no longer have free access to their dollar deposits since the draconian restrictions imposed by banks in 2019 to mask their insolvency. Cash payment – ​​preferably Lebanese pounds or dollars – has become the norm, which further complicates the daily lives of Lebanese who are struggling to access their money, in the midst of an aggravated economic crisis.

“Tired of begging for your own money”

On March 30, Father Charbel Batour, who heads Notre-Dame-de-Jamhour College in Beirut, had to ask parents to pay school fees in cash. “They paid us mostly in checks or by bank transfer, but these are only fictitious sums, in the bank for accounting purposes, without actually being there”he explains. The college has thus received nearly 15 billion pounds (€564,344) since the start of the school year, but the banks require it to deposit equivalent sums in “fresh” money to access it.

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A headache for the rector, who has to pay 2.5 billion pounds (€94,057) every month for the salaries of Jamhour’s 791 employees, to which are added costs payable in cash dollars, such as fuel oil for the generators, or school materials. “The result is that we can no longer pay from our accounts”worries Father Batour, tired “to beg for his own money”. “We are humiliated every day to have to negotiate with banks that blame the Banque du Liban”launches the director.

“All bank accounts are blocked”

The pressure is the same in the health sector. Yara had the painful experience of this a month ago, when her father, victim of a heart attack, had to be operated on urgently. “We transported him to three hospitals before he could be admittedshe says. The first couldn’t afford to carry out operations, the second asked us for 14,000 dollars in cash while my father waited in the emergency room. » The intervention of a cardiologist friend finally allows her and her brothers to have their father admitted to a third hospital, which claims 6,000 dollars in cash for the same surgery. “If we didn’t have dollar revenue, we would never have been able to raise this amount.Yara is moved. What happened to my father is a metaphor for this decrepit Lebanon. »

“All the accounts are blocked, we cannot dispose of the money that goes into the bank as we wantrebounds doctor Georges Dabar, medical director of the Hôtel-Dieu de France, in Beirut, and all of our suppliers require payment in cash dollars. » Every Monday, the establishment must thus, for lack of public current, pay in cash from 70,000 to 80,000 dollars of fuel oil. The hospital now bills medical costs in dollars. “For people who cannot afford it, we have created a social fund to try to cover these bills”says Dr. Dabar.

The economist Kamal Hamdane sees in this logic of generalization of cash a desire to “to push the Lebanese to take out the billions of dollars they have hoarded since there is no more confidence in the banks”. A strategy aimed at “to buy time, while the reserves of the Banque du Liban are in free fall and the banks are bankrupt”.

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A damaged banking sector

► At its peak, the Lebanese banking sector was three times the national GDP, with deposits totaling more than $150 billion.

► But since the crisis, the volume of loans has fallen from 59 billion dollars in 2018 to 29.2 billion dollars at the end of 2021, according to the Association of Banks of Lebanon.

► The current government of Najib Mikati assessed the losses of the financial sector at 69 billion dollars before starting negotiations in January with the International Monetary Fund, which resulted on Thursday April 7 in an agreement in principle for a plan of $3 billion in aid.

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