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Lebanon finance minister asks banks to cut interest rates

January 31, 2020 at 7:41 pm

Ministger of Finance Ghazi Wazni arrives for the inaugural cabinet meeting at the presidential palace in Baabda east of capital Beirut on 22 January, 2020 [AFP/Getty Images]

Lebanon’s finance minister urged the banks on Friday to cut interest rates and also tried to reassure savers that their deposits would not be touched as the country wrestles with a financial crisis.

The new government, which must still win a parliamentary vote of confidence, faces a liquidity crunch that has fuelled inflation and weakened the Lebanese pound.

The financial crisis, Lebanon’s worst in decades, has also shaken confidence in the banks, which have imposed informal controls, and spurred fears among depositors over their savings.

Finance Minister Ghazi Wazni called on the Association of Banks in Lebanon (ABL) to reduce interest rates “in the coming period in order to spur economic activity and ease the burden on public finances”, his office said in a statement issued after the minister met with the association.

READ: Lebanon central bank reassures foreign investors about deposits

The statement cited ABL chairman Salim Sfeir as saying the meeting “was very positive”. He later said in a tweet that banks would work to bring down interest rates.

The central bank told commercial banks in December to cap their interest rates on deposits in foreign currencies at 5% and to cap the rate on Lebanese pound deposits at 8.5%.

The outgoing economy minister, Mansour Bteish, said this month that Lebanon must bring interest rates down drastically as a first step towards rescuing its economy.