Governor of Banque Du Liban Riad Salameh said on Monday that Lebanon has passed through several staged and managed to preserve stability of the Lebanese Pound exchange rate.
In a press conference, Salameh explained that since 2015, Lebanon has been facing sanctions that affected the movement of funds into Lebanon, but the central bank took the necessary measures to make Lebanon involved in the globalization.
“We went through long political vacuums, we witnessed repeated delays in holding the elections, and the resignation of the PM Hariri from Saudi Arabia had its toll on the Lebanese economy; all of this coincided with the expansion of the public sector, which led us to register a high deficit in 2018,” he said.
Salameh pointed out that Lebanon has a dollarized economy, so if there are no dollars in the market there is no economy, noting that they will try to decrease the interest rate amid the management of the liquidity to preserve the survival of the banks.
“In these exceptional circumstances, the Central Bank’s main goal is to preserve stability of Lebanese Pound and we have the means for this,” he stressed, adding that measures have been taken so that depositors do not bear losses.
“A haircut is not on the table and we have placed a mechanism to protect depositors,” he reiterated, stating that capital control is also not on the table and the Central Bank does not have the authority to implement such a measure. “This country lives off of freedom of financial transfers.”
The governor also said that the money that banks borrow from the Central Bank in US dollars cannot be transferred abroad.
On the measures taken by the banks, Salameh affirmed that they have asked the banks to re-evaluate all credit facilities that they had reduced since October 17 and to maintain credit cards ceilings.
“When there are exceptional circumstances the banking sector must take steps to manage its liquidity and protect all deposits and we are asking them to take steps to relieve the market,” he explained.
Salameh emphasized that the Central Bank has capacities whether in liquidity in foreign currency, investments and government bonds, adding that they are providing the funding for this country, but they are not the ones spending the money.
“Foreign reserves excluding gold is around $38 billion including Eurobonds,” he revealed.
Answering a question that the Central Bank is implementing US policies, the governor stressed that the bank applies the policy that serves Lebanon’s interest and protect the country amid the difficult circumstances in the region.