Lebanon Plan Sees 93% Currency Slide, Turns Bulk of FX Deposits to Pounds

Lebanon Plan Sees 93% Currency Slide, Turns Bulk of FX Deposits to Pounds

A government plan for tackling Lebanon's financial crisis projects a 93% devaluation of the Lebanese pound and converts the bulk of hard currency deposits in the banking system to local currency, according to a blueprint seen by Reuters.

Of $104 billion of hard currency deposits, the plan foresees returning just $25 billion to savers in US dollars, with most of what's left converted to pounds at several exchange rates, including one that would wipe 75% off some deposits.

The plan sets a 15-year timeframe for paying back all depositors, Reuters reported.

The World Bank has described Lebanon's crisis as one of the worst depressions in world history. Depositors have been largely frozen out of US dollar accounts since October 2019, during which time the pound has lost more than 90% of its value.

A financial plan is crucial if Lebanon is to secure an IMF bailout, widely seen as the only way for it to chart a path out of the crisis. Lebanon began talks with the IMF last week.

The plan, based on Sept 2021 data, foresees an exchange rate of 20,000 pounds per dollar, compared to the official rate of 1,500, which the government has yet to adjust even as the central bank