BDL Governor Salameh: No need for deposits haircut

Lebanese central bank governor Riad Salameh defended his record on Wednesday, rejecting criticism from the prime minister that he was to blame for a financial crisis and assuring savers there was no need for a haircut on deposits.

Salameh said the central bank did not hide information and that policies of financial engineering have helped buy Lebanon time to enact reforms and finance critical imports.

"There is absolutely no need for a haircut and a haircut should not be adopted," Salameh said in a televised address.

He said that while the central bank had financed the government, it was the government that spent the funds.

As for the funds transferred abroad, Salameh said that 5.9 billion US dollars were transferred outside Lebanon, with 3.7 billion of them used to cover loans and 2.2 billion were withdrawn in cash from the accounts of clients in banks.

Salameh also tackled the exchange rate of the Lebanese pound at the money changers, saying that that rate is affected by the supply and demand.

“We tried as much as possible to control the movement of the US dollar price at money changers,” he added.

Salameh concluded by stressing that the Banque du Liban will remain “cooperative with the government and Prime Minister Hassan Diab,” adding that it will not be “a tool to incite instability, but it will act in accordance with the monetary and credit law and maintain the independence of its decision.”