Officials weigh a $2 billion loan plan funded from central bank reserves

Lebanese government, economic and banking officials are discussing a $2 billion credit plan, according to a working paper obtained by Asharq Al-Awsat. The proposal is not yet approved.

Half would go to consumers, including up to $400 million in car loans and $600 million in one-year personal loans. The other half would go to businesses: about $700 million for working capital and $300 million to modernise machinery. The money would come almost entirely from Banque du Liban's foreign-currency reserves, estimated at about $11.6 billion, with banks earning fixed margins of 2 to 3 points.

The paper projects about $2.95 billion in economic activity and up to $574 million in state revenue in the first year. It notes industry runs at about half its capacity.

Any use of these reserves raises a fair question. BDL sources told LBCI this week that the reserves ultimately belong to depositors, who can still withdraw only $500 to $1,000 a month.