Central Bank (BDL) will extend stimulus package

The $1 billion stimulus package of the Central Bank (BDL) for 2017, which allows banks to provide subsidized loans to the private sector, has been completely used up, said Governor Riad Salameh.

BDL will soon issue a new circular that will be applied immediately to ensure the continuity of subsidized loans, Salameh said.

The Central Bank has so far injected $5.4 billion into the economy through this stimulus package. Under the program, BDL grants soft loans to the banks at an interest rate of one percent. The banks should use these funds to lend to the productive sectors at low interest rates and to also provide subsidized housing loans.

BDL began this stimulus program in 2013 when many banks could no longer use additional amounts of their reserve requirements to provide soft loans according to an earlier incentive scheme launched in 2009. Under that scheme, BDL exempted banks from reserve requirements, provided they grant soft loans to productive sectors.

Salameh said that banks can no longer use their reserve requirements to provide subsidized loans.