Central Bank injects additional $500 million to the stimulus package
The Central Bank (BDL) has decided to inject an additional $500 million to the stimulus package for 2017 which aims to finance productive projects and home purchases at subsidized rates, according to BDL’s intermediate circular 475.
This brings the stimulus earmarked for the current year to $1.5 billion. The $1 billion originally allocated for 2017 has already been used up.
BDL will continue to charge the banks a one percent interest rate on the additional funds if they are denominated in liras. The banks will pay an interest rate equivalent to the upper limit of the US Federal Funds Rate (FFR) on loans denominated in dollars.
The additional funds should be used to finance new projects or to expand existing ones. They cannot be used to refinance existing projects. The benefiting projects can come from various productive sectors including energy, environmental, and artistic industries such as film and movie production.
Lebanese expatriates living abroad for more than five years can benefit from subsidized loans of up to $800,000 to buy residential units in Lebanon. They can also obtain subsidized loans of up to $15 million to finance new projects on the local market with the exception of real estate development projects.
The Central Bank said in the circular that starting from Oct. 20, 2017 banks can no longer benefit from exemptions on part of their reserve requirements against subsidized loans. BDL launched an initiative in 2009 to encourage banks to provide soft loans to the private sector by exempting them from part of their reserve requirements. In 2013, BDL launched the stimulus program as many banks could no longer qualify for reserve requirement cuts.
With the additional sum allocated for the remainder of 2017, the funds injected by BDL to stimulate the economy reach $5.9 billion. The annual amount injected in the economy was often $1 billion, only in 2013 and 2017 did it exceed this figure to reach $1.5 billion.