Beirut, Feb 14 : Lebanon's Central Bank has reduced interest rates on the US dollar and Lebanese pound deposits, in an effort to ease the country's ongoing financial crisis.

On Thursday, the bank imposed an interest rate cap of 4 per cent on dollar deposits and 7.5 per cent on Lebanese pound deposits, Xinhua news agency reported.

Interest rate on dollar deposits will drop to 2 per cent for accounts frozen over one month, 3 per cent for accounts frozen over six months, and 4 per cent for accounts frozen for a year and more.

Interest rate on Lebanese pound deposits will be 5.5 per cent for accounts frozen for a month, 6.5 per cent for accounts frozen for over six months, and 7.5 per cent for accounts frozen over a year and more.

The Central Bank capped interest rates on deposits in US dollar and Lebanese pound to 5 and 8.5 per cent respectively, in December 2019.

Thursday's development comes after the Lebanese Parliament approved the government's budget for 2020 last month.

The state budget was first drafted by the government of former Prime Minister Saad Hariri, who resigned two weeks after nationwide protests that started on October 17, 2019, Efe news reported.

Lebanon has one of the biggest public debt ratios in the world, equivalent to about 150 per cent of its gross domestic product.

Since the protests started, the economy has been progressively deteriorating and the Lebanese pound has lost its value against the US dollar, which is widely used in Lebanon.

In Lebanon, people cannot withdraw more than $300 per week from banks due to restrictions imposed by each entity in the wake of a lack of regulation by the Central Bank.

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