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Counterproductive and unnecessary for real economy

Arab Fund to lend $165 million to Housing Bank - Proceeds are adequate to lend to over 1,000 borrowers

Public debt up with higher deficits

Home Counterproductive and unnecessary for real economy

Home Pro

May 1, 2020

A haircut on deposits, under any name or scheme, in any amount, targeting any depositor, should not be considered in an economic revival plan.

A haircut is not only a violation of constitutional rights, but is also counterproductive and harmful for the (real) economy. Moreover, it does not achieve an equitable distribution of losses (even by one cent). But most importantly it is not necessary as demonstrated by the Economic Revival Plan prepared by Lebanon Opportunities.

Those proposing one form or another of haircut have overlooked the fact that not all deposits in banks are owned by individuals. For this reason, they have to revise their models accordingly.

Deposits also include accounts belonging to the public sector, Social Security, companies, NGOs, real estate developers, and cooperatives, as well as borrowed money.

Some of the harmful effects of a haircut on the economy include a too long delay for the banking sector to regain trust which deprives the economy of funds earmarked for consumer spending and investments.

It is difficult to achieve fairness in a haircut between old and new deposits, lira and dollar funds, as well as hard-earned and speculative money.

For more info, kindly click on our third party website at Lebanese Opportunites.

Arab Fund to lend $165 million to Housing Bank - Proceeds are adequate to lend to over 1,000 borrowers

Public debt up with higher deficits

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