On August 26th, 2020 the Lebanese central bank (the “BDL”) issued intermediate circular number 568 (the “Circular”) enacting in its decision No: 13260 a framework that enables customers to repay their foreign currency retail, personal and housing loans (the “Loans“) in Lebanese Pounds, as follows:
Clients may repay their Loans denominated in foreign currency in Lebanese Pounds at the official exchange rate currently averaging around 1507.5 Lebanese Pound for every United States Dollar – Lebanese banks and financial institutions being required to accept such repayment if:
- The client is not a “non-resident” according to the definition issued by the BDL*;
- The client does not have available foreign currency in the creditor bank; and
- The Loan fulfills the following caps:
- Cap of $800,000 (eight hundred thousand United States Dollars) for housing loans;and
- $100,000 (one hundred thousand United States Dollars) for all other retail loans.
The circular also provides that the repayment of all the other loans and facilities not otherwise mentioned herein (with a special mention to commercial loans) shall remain subject to the currency of the original loan agreement.
With respect to “non-residents”, they may only repay their Loans by transferring new funds from abroad.
*According to article 4 of basic circular number 24 (basic decision number 6170) issued by the Lebanese Central Bank, persons considered “non-resident” are:
- Lebanese or foreign nationals who have continuously worked form abroad, for at least one year, irrespective of their principal place of residence;
- Persons who have their principal place of residence outside Lebanon but have worked in an intermittent manner in Lebanon for less than one year;
- Foreign nationals whose principal pleace of residence is outside Lebanon and are present in Lebanon for study or medical purposes, irrespective of the length of their stay in Lebanon;
- Foreigner nationals, members of foreign diplomatic missions, and official employees in embassies and foreign interests in Lebanon and in International organizations; and
- Lebanese or foreign nationals who do not work and whose main place residence has been outside Lebanon for at least one year.
According to article 5 of basic circular number 24 (basic decision number 6170) issued by the Lebanese Central Bank, entities considered “non-resident” are:
- companies and establishments, whether Lebanon or foreign (including hospitals and schools) along with any and all of its branches- (i) located outside Lebanon and exercising an economic activity for more than one year or that (ii) own real estate rights or properties outside Lebanon used for the exercise of an economic activity such as (without limitation to) production, services or charity for more than one year.
- Offshore companies and establishments located outside Lebanese territories.
- Embassies, consulates or foreign interests located in Lebanon.
- International non-governmental organizations in Lebanon.
- Lebanese establishments and companies located in free zones outside Lebanese territories.
Click here to download the full circular.