Mansory’s first major and exposed financial engineering

Yesterday, the Ministry of Finance presented to the Council of Ministers the topic of requesting entities to release their funds from banks, namely: the army, the Supreme Relief Commission, the Council for Development and Reconstruction, and ESCWA.

After the Council of Ministers reviewed the request and the attached documents, it decided to take the appropriate action in coordination with the Bank of Lebanon.

The text of the government decision stated: “It became clear that on 10/17/2019, as a result of the economic crisis, restrictions were imposed on withdrawals and transfers in local US dollars of funds deposited in bank accounts, including accounts of entities requesting the release of their funds from banks, and these entities are distributed among those who have accounts.” There are banking institutions present at the Bank of Lebanon, which are the Lebanese Army (to cover the army’s necessary and urgent needs), and the Higher Relief Organization, which requests that it be able to transfer amounts related to the financial gift provided by the Sultanate of Oman pursuant to Decree 2548 dated 2/11/2016, and the financial gift provided by the State of Kuwait during the year. 2008, and among the parties that hold bank accounts in private banks, and are not entitled to guarantee them from public treasury funds, which are the Arab Parliamentary Union and the ESCWA organization.

It has also been shown that the Council for Development and Reconstruction, in its letter addressed to the Ministry of Finance, presents the problem it faces in implementing the projects, due to “the loan and grant funds deposited in the accounts of the Bank of Lebanon being considered ‘not fresh,’ which hinders the process of completing them and following up on their implementation.”

Concerned sources described this method of returning deposits as “the first major and open financial engineering tasked by Acting Governor Wassim Mansouri,” and added a number of observations:

Some parties may deserve to recover what they demand, but the government decision is discretionary, as it ignores other requests from hospitals, universities, municipalities, and social security…

Returning deposits to the aforementioned entities also ignores the general depositors who have been waiting for more than 4 years and have been subjected to harsh forced deductions (haircuts) from their deposits.

The government and the Bank of Lebanon continue to buy time without developing any plan to recover all deposits.

The Bank of Lebanon is carefully determining what the government can and cannot spend under the pretext of not affecting the exchange rate, noting that the government’s account 36 at the Central Bank has a value of more than one billion dollars.

In a related context, the Council of Ministers decided to amend Decree 13020, granting ministers and representatives an additional lump sum compensation worth 25 million liras, in addition to “double” the compensation they receive.

Resolution No. 24 – Requesting entities to release their funds from banks-1

Resolution No. 24 – Requesting entities to release their funds from banks-2