Lebanon says rise in imports behind spike in dollar demand
October 4, 2019, 10:35 am

Lebanon says rise in imports behind spike in dollar demand

Lebanon’s Central Bank Governor Riad Salameh speaks to a reporter during an interview with AFP at his office in Beirut on December 15, 2017. (AFP)

Lebanon’s central bank governor said on Thursday that increased imports could have raised the demand for dollars in the country, noting this has pushed money changers to charge higher exchange rates.

In a televised speech, Riad Salameh also raised doubts over whether increased imports were being used for local consumption, following reports of smuggling to neighboring Syria.

“We don’t know if all of these imports are for domestic consumption,” he said.

Lebanon has had a fixed exchange rate of around 1,500 Lebanese pounds to the dollar in place since 1997.

But last week, petrol station owners and flour producers who pay importers and suppliers in dollars complained that they had to resort to much higher rates from money changers because banks were not meeting their demand.

Exchange rates on the parallel market reached 1,600 Lebanese pounds last week and it has become almost impossible to withdraw dollars from ATMs or to convert large sums in banks.

“Since June, the demand for (dollar) banknotes has increased,” Salameh said, adding that shipments of dollar notes used by money exchange houses has “doubled.”

“This (increased) demand could be domestic, from petrol station owners, flour mills, or pharmacies,” who have to pay importers and suppliers in dollars, he said.

He explained that the spike in demand is “because of an increase in imports on certain goods”, adding that it has led to a discrepancy of 1 to 3 percent between the exchange rate offered by money changers and the fixed price at banks.

The central bank on Monday adopted a measure that would allow importers of petroleum products, wheat and medicine to obtain dollars at the official bank rate to pay for key imports.

“Banks that issue letters of credit for the importation of petroleum products (petrol, fuel oil and gas), wheat and medicine will be able to ask the Banque du Liban to ensure the value of such credits in US dollars,” read the decision published by the National News Agency.

On Thursday, Salameh said that commercial banks must ensure the central bank credit lines are used exclusively to purchase imports for domestic consumption.

“This is an essential matter, not just for Lebanon’s monetary (situation) but also its reputation” and its place in the globalised economy, he added.

In August, Lebanon’s Blominvest Bank said oil imports “more than doubled” in the first quarter of 2019.

It said “the smuggling to Syria amid the rationing of oil in the country” could be among the factors leading to the hike.

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BENEFIT, the Kingdom’s innovator and leading company in Fintech and electronic financial transactions service, held its Annual General Meeting (AGM) at the company’s headquarters in the Seef District.
During the meeting, shareholders approved all items listed on the agenda, including the ratification of the minutes of the previous AGM held on 26 March 2024. The session reviewed and approved the Board’s Annual Report on the company’s activities and financial performance for the fiscal year ended 31 December 2024, and the shareholders expressed their satisfaction with the company’s operational and financial results during the reporting period.
The meeting also reviewed the Independent External Auditor’s Report on the company’s consolidated financial statements for the year ended 31 December 2024. Subsequently, the shareholders approved the audited financial statements for the fiscal year. Based on the Board’s recommendation, the shareholders approved the distribution of a cash dividend equivalent to 10% of the paid-up share capital.
Furthermore, the shareholders endorsed the allocation of a total amount of BD 172,500 as remuneration to the members of the Board for the year ended 31 December 2024, subject to prior clearance by related authorities.
The extension of the current composition of the Board was approved, which includes ten members and one CBB observer, for a further six-month term, expiring in September 2025, pending no objection from the CBB.
The meeting reviewed and approved the Corporate Governance Report for 2024, which affirmed the company’s full compliance with the corporate governance directives issued by the CBB and other applicable regulatory frameworks. The AGM absolved the Board Members of liability for any of their actions during the year ending on 31st December 2024, in accordance with the Commercial Companies Law.
In alignment with regulatory requirements, the session approved the reappointment of Ernst & Young (EY) as the company’s External Auditors for the fiscal year 2025, covering both the parent company and its subsidiaries—Sinnad and Bahrain FinTech Bay. The Board was authorised to determine the external auditors’ professional fees, subject to approval from the CBB, and the meeting concluded with a discussion of any additional issues as per Article (207) of the Commercial Companies Law.
Speaking on the company’s performance, Mr. Mohamed Al Bastaki, Chairman BENEFIT , stated: “In terms of the financial results for 2024, I am pleased to say that the year gone by has also been proved to be a success in delivering tangible results. Growth rate for 2024 was 19 per cent. Revenue for the year was BD 17 M (US$ 45.3 Million) and net profit was 2 Million ($ 5.3 Million).

Mr. Al Bastaki also announced that the Board had formally adopted a new three-year strategic roadmap to commence in 2025. The strategy encompasses a phased international expansion, optimisation of internal operations, enhanced revenue diversification, long-term sustainability initiatives, and the advancement of innovation and digital transformation initiatives across all service lines.
“I extend my sincere appreciation to the CBB for its continued support of BENEFIT and its pivotal role in fostering a stable and progressive regulatory environment for the Kingdom’s banking and financial sector—an environment that has significantly reinforced Bahrain’s standing as a leading financial hub in the region,” said Mr. Al Bastaki. “I would also like to thank our partner banks and valued customers for their trust, and our shareholders for their ongoing encouragement. The achievements of 2024 set a strong precedent, and I am confident they will serve as a foundation for yet another successful and impactful year ahead.”
Chief Executive of BENEFIT; Mr. Abdulwahed AlJanahi commented, “The year 2024 represented another pivotal chapter in BENEFIT ’s evolution. We achieved substantial progress in advancing our digital strategy across multiple sectors, while reinforcing our long-term commitment to the development of Bahrain’s financial services and payments landscape. Throughout the year, we remained firmly aligned with our objective of delivering measurable value to our shareholders, strategic partners, and customers. At the same time, we continued to play an active role in enabling Bahrain’s digital economy by introducing innovative solutions and service enhancements that directly address market needs and future opportunities.”
Mr. AlJanahi affirmed that BENEFIT has successfully developed a robust and well-integrated payment network that connects individuals and businesses across Bahrain, accelerating the adoption of emerging technologies in the banking and financial services sector and reinforcing Bahrain’s position as a growing fintech hub, and added, “Our achievements of the past year reflect a long-term vision to establish a resilient electronic payment infrastructure that supports the Kingdom’s digital economy. Key developments in 2024 included the implementation of central authentication for open banking via BENEFIT Pay”
Mr. AlJanahi concluded by thanking the Board for its strategic direction, the company’s staff for their continued dedication, and the Central Bank of Bahrain, member banks, and shareholders for their valuable partnership and confidence in the company’s long-term vision.