$1 billion to subsidize loans for housing and other productive sectors

Next week the Central Bank (BDL) is scheduled to launch a new stimulus package of around $1 billion to subsidize housing loans and loans provided to the productive sectors, according to Wael Hamdan, Head of BDL’s Financing Unit.

There will be some modifications to the new package but they are not major changes, Hamdan said. Interest rates will be raised slightly. The Public Corporation for Housing (PCH) will have the lion’s share of this support, according to Hamdan. Banque de l’Habitat (The Housing Bank) will also continue to benefit from this program.

Hamdan said that the productive and technology sectors will continue to profit from the subsidies as well as microcredit borrowers and students.

Banks will be required to abide by limits set by BDL on the amounts they can lend under the stimulus package.

BDL said that the additional $500 million stimulus package granted for 2017 has been used up. It said that demand for subsidized loans has been unprecedented since the last package was approved in October 2017. Strong demand caused delays in the processing of loan applications and approvals.

Rony Lahoud, Chairman of PCH, said they continued to process loan applications at the usual pace since it takes up to four months for the application files to reach the banks.

Only lira-based subsidized loans have been granted in the last two months. Most of the loans that the banks are providing are dollar denominated. The reason for the shift in lending currencies was a scarcity in liquidity in lira.

BDL had originally earmarked a stimulus package of $1 billion for 2017 and when it was completely disbursed, it issued an additional $500 million.

The sums allocated by BDL under this stimulus program have reached $5.9 billion so far. The program was launched in 2013 when many banks could no longer qualify for exemptions on part of their reserve requirements against the subsidized loans they grant. The Central Bank said last year that, starting in October 2017, banks can no longer benefit from these exemptions.