World Bank to Depositor’s Union: $247 million loan to support low-income households should be distributed only in USD

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  • World Bank to Depositor’s Union: $247 million loan to support low-income households should be distributed only in USD

Subsequent to repeated lobbying and request for clarification by the Depositors Union, Saroj Kumar Jha, Regional Director of the World Bank for Lebanon, Iraq, Syria, Jordan and Iran, has stated that the World Bank’s official position on the $246 million loan being debated in the Lebanese Parliament is that the loan should be distributed solely in US dollar. The statement came during a meeting between representatives of the Depositors Union of Lebanon (DU), Mr. Kumar Jha and his team held on April 13, 2021. The statement represents a firm rebuttal to the statement issued on 6 April 2021 by the Governor of the Banque du Liban (BDL), Lebanon’s Central Bank, Riad Salameh who outlined that BDL to disburse the funds “at the parallel market rate,” which would be determined by “donors and the Ministry of Finance.” The statement also contradicts the intention of the Government of Lebanon and the Administration and Finance Committee to see the loan distributed to beneficiaries at a rate of 6,240 to the US dollar.

The move by the World Bank represents a clear position to the Government of Lebanon that the multiple exchange rate policy upheld by the BDL has no basis and should not be applied to the disbursement of the Loan. During the meeting between the World Bank and the Depositors Union, Mr. Kumar Jha clarified that the bank’s position is that the loan be distributed directly to beneficiaries in USD and that the programme was not yet ready for implementation. Mr. Kumar Jha also stated the World Bank considers that there has been no official response from the Government of Lebanon to its request that the loan be distributed in USD, further clarifying that this position may change if an International Monetary Fund programme or an amendment to the official legal exchange rate takes place.

“The Depositors Union emphasizes on the position of the World Bank to refrain from engaging in the blatantly illegal multiple exchange rate policies imposed on the Lebanese by the BDL and the ruling class of Lebanon,” said Zeina Jaber, member of the legal committee at the Depositors Union. “The statement sends a clear message to the Government of Lebanon that the international community will not be complicit in the theft of Lebanon’s small and medium depositors, nor the continued and intentional delay in the implementation of a clear, transparent and fair solution to the financial crisis—which has always been the demand of the Depositors Union.”

The Depositors Union was asked to the meeting after sending several letters to the World Bank and releasing press releases which outline its clear position that the disbursement of aid and loans in Lebanon must not be subject to the illegal exchange rate policy practiced by the BDL.

“While the statement and intention to distribute this loan in USD is welcome, the programme it supports should not be seen as a substitute for universal social protection to which the Lebanese are entitled to,” said Nizar Ghanem, member of the policy committee at the Depositors Union. “Under no circumstances should this loan be distributed in a currency other than that which it was provided, and the programme which manages these funds should not be subject to manipulation to deepen the ruling classes patronage system and clientelist network. The World Bank should remain vigilant that the funds are distributed solely on the objective basis of need, and feed into a more sustainable social protection system for the Lebanese who have suffered from the lack of any real solution to the current economic, financial and social crises.”

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