The International Monetary Fund said on Thursday, June 10, 2021 that proposals to monitor and control capital and draw down deposits in Lebanon need to be part of broader policy reforms to be sustainable. </p><div> <p>"We do not see a need to implement the Capital Control and Control Law, especially without the support of appropriate fiscal, monetary and exchange rate policies," said Gary Rice, spokesman for the fund.
“In our view, proposals to implement a capital control law and formalize the withdrawal of deposits will need to be part of a broader set of policy measures and reforms in order to become feasible and sustainable.”
The Central Bank of Lebanon said last week that depositors of existing accounts as of October 2019 will be able to withdraw up to $400 per month, in addition to the equivalent in Lebanese pounds.
This came after Lebanese banks prevented depositors and their dollar accounts from being transferred abroad.
On Thursday, Rice said it was not clear to the International Monetary Fund how it would finance the withdrawal from deposits, given the sharp decline in foreign exchange in Lebanon over the past few years.
At the same time, he said that there is also a “grave risk” that the trader will increase the local currency again from what he described as the already high levels.
“This increases inflationary pressures and currency depreciation, which will be very harmful to living standards,” he added.