Low-interest loans
to industrial companies

Banks will stop legal action

against defaulting manufacturers

An agreement between the Association of Banks (ABL) and the Ministry of Industry will ease the debt burden of industrial firms and provide them with additional credit facilities.

The banks will reschedule existing loans owed by industrialists and maturing starting from March 2020 over six months when needed. The rescheduling will be for two years or five years depending on each customer’s ability to repay.

The banks will set a ceiling consisting of the Beirut Reference Rate (BRR) plus one percent on interest rates on loans provided to manufacturers, according to the agreement.

The ceiling will not include additional margins to cover credit risks, the banks’ operating expenses, or provisions. It will be effective for one year and could be renewed depending on the general situation. Bank Audi and BLOM Bank said they will provide these loans at an interest rate ceiling of BRR plus zero.

The banks will refrain from all legal action against industrialists in default until the end of 2020, according to the agreement.

They will also provide exceptional loans for working capital needs and for payroll, as required by earlier circulars issued by Central Bank (BDL).

The banks also pledged to support any initiative launched by BDL, the government, or any ministry.

These decisions target manufacturing firms of all sizes.

Ziad Bekdache Deputy Chairman of the Association of Industrialists said that the new ceiling on industrial loans would be valuable if it is actually implemented. Previous promises and circulars facilitating private sector refinancing have not been implemented so far.

Bekdache said he hopes that the banks will be able to fulfill these commitments amid the current challenges that they are facing. He said that the industrialists request the restoration of the credit facility programs that existed before June 2019. They also would like to be able to freely use the annual $3 billion in fresh money they bring to the country from their exports, Bekdache said.

The new measures follow a BDL decision, announced last week, that involves providing access to foreign currency for one year for financing imports of basic food products and imports of raw materials used in the industrial sector. The banks could ask BDL to provide up to $100 million for financing 90 percent of the value of raw materials imported by licensed industrial firms.