Lebanese central bank says pound stable, urges fiscal reform

Lebanon's pound is stable and the central bank has the means to defend its stability, central bank governor Riad Salameh said on Monday, urging fiscal reforms to reinforce monetary stability.

Salameh, in an interview with Reuters, said the central bank was not concerned about the pound - pegged at its current level since 1997 - and is looking at stability on the monetary side which will be reinforced if the fiscal reforms are initiated.

In May, the government completed a $5.5 billion debt swap with the central bank, issuing Eurobonds to the central bank in exchange for Lebanese pound T Bills.

Asked if there were plans for a further debt swap with the government, Salameh, who has been in the job for 25 years, denied and said central bank's balance of payments is behaving relatively well and although there is a slight deficit, it is not to the extent that warrants a new swap operation.

Lebanon has the third largest debt-to-GDP ratio in the world, touching more than 150 percent at the end of 2017, according to the International Monetary Fund (IMF) which said in June Lebanon was in need of “an immediate and substantial fiscal adjustment” to improve debt sustainability.

 

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