Navigating the Dollar landscape: Lebanon's reserves and the new...

3^min

To safeguard what remains of Lebanon's mandatory reserve, the four governor's deputies are reiterating their rejection of further expenditures from the $9 billion fund.

This reserve, the remains of depositor funds, is being drained at $200 million monthly for state financing, including salaries, wages, and covering losses in the banking sector.

Sources from the governor's deputies state that if the government wishes to continue spending from this reserve, it must enact legislation for borrowing and take responsibility for this legislation and spending. They emphasize that the government has no authority to utilize these funds as they belong to depositors.

These sources expect that the parliament will not proceed with such legislation.

Consequently, the governor's deputies, particularly the First Deputy Governor, Wassim Mansouri, will only make decisions to halt payments and intervention in the dollar market, aligning with the policy they have pursued since taking office. This policy entails informing the governor of their refusal to continue spending from the reserve without adopting authorized legislation.

Sources close to the First Deputy Governor, Wassim Mansouri, state that besides preserving the remaining reserve, he aims to protect the most marginalized groups in society, particularly public sector employees receiving their salaries in Lebanese lira.

If the authorities adopt a law that permits the Central Bank of Lebanon to continue financing the state without further depleting the reserve through salaries and wages, public sector workers will receive a fixed amount in US dollars for a specific period and at a fixed exchange rate. This move would be synchronized with the start of the reform process.

Subsequently, the authorities could gradually transition from the current Sayrafa platform to a new one. There may be an interim stage where both platforms operate simultaneously before ultimately shifting to the new platform, which allows banks to buy and sell dollars while setting their exchange rates.

However, the operation of this new platform would be accompanied by Central Bank circulars, such as requiring imported dollars to be sold solely through this platform instead of the black market.