Central Bank launches
$1.1 billion stimulus package

Subsidies for old and new housing loans in lira worth $524 million

The Central Bank (BDL) has issued a new stimulus package for 2019 that involves providing interest subsidies to loans worth nearly $1.1 billion, according to a new BDL circular.

The package includes loans denominated in the national currency worth $547 million, and loans in the U.S. dollar totaling $500 million.

The lira loans mainly consist of housing loans which total $524 million. The remaining $50 million comprise microloans, as well as loans for education and productive sectors.

The dollar denominated loans target various borrowers such as education, environmental projects, and productive sectors, as well as residential loans for expatriates.

The housing loans denominated in lira include $325 million in loans approved in 2018 but which have not yet benefited from the subsidies. These loans will be subject to the previous conditions. The remaining $199 million consist of loans that will be granted in 2019.

The banks willing to provide housing loans in lira this year must deposit equivalent amounts in the Lebanese currency with BDL. The deposited sum must be derived from selling dollars to BDL.

Borrowers will have to pay an interest rate of 5.5 percent on residential loans in lira granted in 2019 if the loan is provided through the Public Corporation for Housing (PCH) and Banque de l'Habitat or through protocols concluded between banks and bodies of public sector employees and the military. The lira housing loans that are not provided through these channels will pay a rate of 5.94 percent.

Interest rates previously were around 3.75 percent.

Joseph Sassine, Chairman of Banque de l'Habitat (The Housing Bank), said that they are in talks with BDL to create a specific program for the loans provided by The Housing Bank. He said an agreement could be reached within ten days.

Sassine said that selling dollars to the Central Bank in order to convert them into long-term lira loans will be challenging for banks.

The Housing Bank, which needs liquidity for its lending operations, is still awaiting the formation of the Cabinet in order to secure a soft loan from the Arab Fund for Economic and Social Development. “Since this is an external loan, it needs a guarantee from the Lebanese State,” Sassine said.

BDL has not set quotas for the banks. Each bank will be able to lend as much as it is willing to deposit with the Central Bank within the limits set by the stimulus for the entire banking sector.

The ceiling put on housing loans in lira is set at nearly $300,000 while that put on dollar loans to expatriates is $600,000.