On April 29, 2020, Riad SALAMEH the Lebanese Central Bank governor defended his record, rejecting criticism from the prime minister that he was to blame for a financial crisis and assuring savers there was not necessarily a haircut on their deposits.
In a television speech SALAMEH complained that there was a coordinated campaign against him, arguing that the bank’s role was to finance the state but that ultimately, politicians controlled how it was spent.
SALAMEH has come under fire from critics including the powerful, Iran-backed Shiite group Hezbollah in recent days amid a rapid decline in the pound currency that has fuelled new protests and threatens broader unrest.
“Yes, the central bank financed the state but it is not the one that spent the money. There are those who spent the money,” SALAMEH said.
Lebanon, one of the world’s most heavily indebted states, defaulted on its foreign currency loans last month.
The financial crisis which came to a head in October 2019 has led inflation and unemployment to soar. Savers have been frozen out of their dollar deposits amid a hard currency liquidity crunch.
Lebanese Prime Minister Hassan DIAB cast him as responsible for the currency’s crash, mounting losses in the banking sector, and for lack of transparency and coordination.
SALAMEH defended the central bank’s practices and said it did not hide information.
“This engineering, we were forced to do it to buy time for Lebanon, so Lebanon could reform” he said, and that it was “not the responsibility of the central bank” if the state failed to enact agreed reforms.
David SCHEKER the U.S. State Department’s top Middle East diplomat said to secure international assistance Lebanon “must prove that it is ready to make difficult choices and decisions to show it is 100% committed to reform”.
Fayssal KARAME, a Hezbollah-allied MP, said SALAMEH’s speech did “not provide clear answers” to questions posed by the prime-minister and the fears of Lebanese over their deposits and the exchange rate.
KARAME said in a tweet: “He did not justify the monetary policies which he has followed for decades and which have proved to be failing”.
SALAMEH said “We were not sitting watching” of the currency crash. “We worked with the exchange dealers and tried as much as possible to control the movement of the (dollar) price”.
A rescue plan draft that surfaced this month estimated $83 billion in banking sector losses and proposed a temporary contribution from depositors to help plug it. SALAMEH said depositor money was safe.
SALAMEH said: “There is absolutely no need for a haircut and a haircut should not be adopted” and “We confirm to the Lebanese that their deposits are there and are in the banking sector and are being used.”
The Lebanese Central Bank is still providing dollars at the official rate for imports of wheat, medicine, and fuel.
This article was edited using the data from the thenational.ae, dailystar.com, thisismoney.co.uk.
Source of the photo: stepfeed.com.