Amex cuts Lebanese customers’ credit limits
▶ Retailers stay shut over increased costs as limited availability of foreign currency restricts business activity
American Express has reduced the credit limit and cash advances of customers with cards issued in Lebanon.
The Arab country faces its most dire economic crisis since the end of the civil war in 1990 and its lenders have been limiting capital outflows.
Affected Amex customers found out their credit limit had been reduced when their monthly statements were issued, or received a notification by email as their statement was being issued.
“We understand that our customers in Lebanon may be facing some challenges in [the] market at the moment, however, we are always available to help work out the best resolution for our card members in the current situation,” Paul Mampilli Amex’s head of digital and marketing for the Middle East said.
A long-time customer who asked why his credit card limit had been reduced by about $1,300 (Dh4,771), was told that the decision was neither personal nor reflective of the customer’s credit status with the company, but a decision taken regarding cards with resident addresses in Lebanon.
A large number of petrol stations across Lebanon closed after owners said they would not order more fuel because of restricted access to dollars caused by a financial crisis that is driving more than three weeks of mass protests.
In Beirut, several petrol stations were closed on Saturday while others rationed their sales, state-run National News Agency reported.
One driver said he had to go to several places to fill his tank.
Most stations in the northern province of Akkar were closed, causing a rush at those that were still open.
“The petrol crisis in Akkar has started to pose a threat to daily movement in the province,” the NNA said.
Shortages also prompted fuel stations in the southern city of Tyre to close yesterday, the agency said. In the eastern Bekaa region, some fuel station owners illegally raised their prices by 25 per cent.
The price of fuel is fixed every week by the Energy Ministry and varies with oil prices.
On Thursday, the unions for petrol station owners and for fuel tanker operators said they would sell their current stock but would not order more because of the extra costs brought on by the scarcity of dollars in the country.
One fuel importer told The
National that the country’s stocks would run out in 10 days if imports stopped completely.
“There is a shortage. We are selling less than the demand,” he said.
A representative of the Association of Lebanese Petroleum Importing Companies did not respond to a request for comment.
Like most Lebanese businesses, petrol station owners must pay importers in dollars but sell locally to their clients in Lebanese pounds.
Since this summer, they have been forced to exchange their dollars on the black market, where the exchange rate is about 10 per cent higher than the official rate because the central bank has restricted banks’ access to dollars. Combined with regional instability,
Lebanon’s struggling economy has caused cash flow to the country to dry up.
After petrol station owners went on a one-day strike in September, the government promised that the central bank would guarantee their access to dollars at the official exchange rate. This arrangement was also extended to medicine and wheat imports.
But petrol station owners said on Thursday that in practice, the central bank guaranteed only 85 per cent of their demand for dollars, obliging them to buy the rest on the black market.
The fuel importer and Sami Brax, head of the union of petrol stations, said they did not know why the central bank was not providing their full dollar requirement.
The fuel shortage has caused an open dispute between petrol station owners, fuel importers and the Energy Ministry.
Station owners say the ministry is blaming them for the crisis while not keeping its promises to support the sector. They also criticised importers for insisting on being paid fully in dollars rather than accept 15 per cent in Lebanese pounds.
Despite the petrol stations refusing to buy more stock, importers said they would keep importing fuel.
On Saturday, Lebanon’s eight fuel importers said four of them were receiving shipments. This means that petrol stations run directly by importing companies will keep selling fuel but those operating as franchises might not, the fuel importer said. He estimated that only about a fifth of petrol stations are run by importers.
The importer said only a few of his colleagues have been able to open letters of credit with their banks to secure their imports, one of the conditions imposed by the government to receive dollars at the official exchange rate. Through the letter of credit, the local bank guaranteed payment should the importer default, but it first must be confirmed by an international bank accepted by the fuel supplier.
But Lebanese banks are having trouble obtaining this confirmation as the country sinks deeper into a financial crisis, the importer said.
On Thursday, ratings agency Moody’s downgraded Lebanon’s three largest banks by assets further into junk territory, two days after lowering Lebanon’s sovereign rating, citing the increased likelihood of a debt rescheduling it would classify as a default.
Lebanon’s financial troubles sparked mass protests on October 17, forcing the prime minister to resign on October 29. The country has been without a government since, further weakening the international community’s trust in its finances.
“I managed to open two letters of credit, but I do not know if I will be able to do it again,” the importer said.
But he was optimistic that the government would find a solution after President Michel Aoun, the central bank governor and the head of the Association of Banks in Lebanon met on Saturday to address the financial crisis.
“They must find a solution,” he said.