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Beirut: Lebanon’s Central Bank Governor Riad Salameh said Tuesday that the central bank cannot sustain support for commodities for more than two more months and that the state should come up with a plan in light of worsening economic growth. financial crisis.
In an interview with Al-Arabiya Al-Hadath, Salameh said that the central bank will commit to handing over state accounts as part of any criminal audit, but handing over local bank accounts requires amending the law.
Since last year, Lebanon has witnessed an unprecedented financial collapse and has defaulted on its huge debts. The local currency has collapsed, the banking sector has come to a standstill, and inflation has skyrocketed.
As foreign dollar flows dried up, the central bank used dwindling reserves to provide foreign exchange to finance essential imports of fuel, wheat, and medicines.
In recent months, there has been a climate of anxiety about the imminent end of subsidies and fears of an increase in hunger in a country where half the population is poor.
Salameh said in the interview: “We have the possibility to remain with subsidies for two months … The Bank of Lebanon today ensures everything that the state needs … all funds for electricity, water, fuel, medicine, wheat and communications. “.
He added that lawmakers would meet this week to begin crafting a plan.
Regarding subsidies, he continued, “Is there nothing in the country that is not the Central Bank? This question should be asked of those responsible for the country ”.
Foreign donors have called for criminal scrutiny of the central bank, among key reforms before helping Lebanon emerge from a crisis that has its roots in decades of waste and corruption.
And scrutiny is a basic requirement of the International Monetary Fund, whose talks with the interim government were suspended due to the failure to implement reforms to counter corruption and waste.
But Alvarez & Marsal, which specializes in restructuring consulting, announced last month that it was withdrawing from criminal scrutiny because it had not received the necessary information to complete the task. Some Lebanese officials accused the central bank of using bank secrecy laws to justify withholding information.
Salameh said that the central bank will seek to reorganize and sell Lebanese banks that cannot increase their capital by 20 percent before the deadline set for this at the end of February 2021, otherwise they will have to exit the market by handing over their shares. to the central bank.
(Reuters)
