Lebanon’s Central Bank on Thursday ordered banks to reduce interest rates on U.S. dollar and Lebanese pound deposits, in an effort to ease the country’s financial crisis.
The bank imposed an interest rate cap of 4 percent on dollar deposits and 7.5 percent on Lebanese pound deposits, according to a circular by the central bank.
Interest rate on dollar deposits will drop to 2 percent for accounts frozen over one month, 3 percent for accounts frozen over 6 months, and 4 percent for accounts frozen for a year and more.
Interest rate on Lebanese pound deposits will be 5.5 percent for accounts frozen for a month, 6.5 percent for accounts frozen over 6 months, and 7.5 percent for accounts frozen over a year and more.
The Central Bank capped interest rates on deposits in U.S. dollar and Lebanese pound to 5 and 8.5 percent respectively in December 2019.
Lebanon has been going through a tough financial crisis caused by a drop in foreign reserves of the central bank due to economic slowdown, the drop in cash injection from Lebanese abroad, and transfers of billions of dollars from Lebanese to Swiss and European banks amid nationwide protests.