NuclearVision wrote
But let me ask you, why did the banks lend the government, I mean profit is definitely attractive but I don't think
the government had a good reputation at any point since the 90s ....
The government didn't have a good reputation true, but BDL promised the banks to stabilize the USD/LBP exchange rate @ 1500 no matter what happens.
This put too much stress on the government because maintaining the exchange rate means foreign currency which means external debts and fresh dollar.
Since no country is willing to lend us money because of our political attitude and situation, and since fresh dollar is almost non existent due to lack of investments and trust in our banking system recently, their only option is to impose strict rules or capital control.
I am also not into economics and I don't know the technical words but IMO this is how it works :
BDL borrowed from banks 60 Billion dollars of which 70% are in LBP; that means 42 billions of dollars in LBP which is equivalent to 63 trillions of LBP at an exchange rate of 1500 LBP/USD.
So if BDL owes the banks 18 billions of USD and 63 trillions of LBP, the devaluation of the LBP means less debts to BDL.
At an exchange rate of 2000 LBP/USD BDL will owe the banks 49.5 Billion of USD instead of 60.
So what are they doing ? BDL is insisting on the official exchange rate to protect the banks... Why?
BDL injecting USD in black market ---> 1 million dollar returns an extra 400 millions of LBP at 1900 LBP/USD ---> BDL paying the banks in LBP --> Banks giving you that money instead of your USD.
No risk. no drama.... Banks are stealing your foreign currency and BDL is doing everything to protect them.
This is the highest level of corruption a government can achieve because everything they're doing is against the law and I'm expecting a guinness world record soon.
BDL has no power and no control over the banks; they are ruling the country economically and last week's strike had nothing to do with the security. It was an objection because of BDL mandating them to increase their capital by 10% before the end of the year and a further 10% before the middle of 2020.