The Deputies of the Governor of the Central Bank of Lebanon, Riad Salameh, are weighing their options these days in a challenging and complex preparation for the day following Salameh's departure from office. All files are "inflamed," especially the deposit losses caused by the Central Bank, the banks, and corruption within the system.
This article was originally published in and translated from Lebanese newspaper Nidaa al-Watan.
However, this issue is pending resolution, awaiting the Parliament's decision and a final agreement with the International Monetary Fund (IMF) regarding the distribution of losses and the restructuring of banks. Today's most urgent issue is the Sayrafa platform: will it continue, stop, or continue for a while and then stop?
The sources of the governor’s deputies do not yet know the final answer because it is related to the duration of the presidential vacuum and then the formation of a government that falls under the responsibility of appointing a new governor for Banque du Liban.
According to what those sources told Nidaa al-Watan, "the issue will take many months, and perhaps be very long."
Meanwhile, opinions are conflicting, knowing that the governor's deputies are divided between those accepting and rejecting the Sayrafa platform to date, and none of them explicitly supports it.
The same sources say: "As for the 'fireball' reaching their lap, will they believe in themselves and stop Sayrafa, or will they succumb to political pressure, especially from the Speaker of Parliament and Prime Minister, Nabih Berri, and Najib Mikati, to preserve the existing status quo with the prevalence of the illusion of monetary stability again? Although there is a cost to the alleged stability?
According to Nidaa al-Watan's sources, one of the scenarios being discussed is that a deputy of the governor is currently conducting digital maneuvers or simulating a scenario of abandoning the platform to assess the potential impact on the exchange rate.
This simulation takes into account the money supply in Lebanese lira, the daily market demand for US dollars, and the dollarization rate in the economy, but the possibility of speculation may not be fully taken into account, as was the case in early March when the exchange rate in the parallel market reached 143,000 Lebanese lira and then dropped through an implicit agreement between Salameh and major speculators.
This effort comes in scrutiny and search for a way out because the governor’s deputies are convinced that large profits from Sayrafa go to banks, bankers, and large financiers, and employees and small depositors receive only crumbs.
The losses incurred by the platform from buying US dollars at one rate and selling it at a lower rate are recorded on the balance sheet of the Central Bank, which negatively affects its reserves and the remaining deposits.
The governor’s deputies agree with experts from the IMF and the World Bank, which aim to stop the current form of the platform and work towards unifying exchange rates as a preliminary step before eventually adopting a flexible exchange rate.
Regarding the speculation that Salameh will become an advisor to his deputies after his departure, informed sources do not rule out the possibility that he will remain an advisor to the current ruling system, particularly Mikati and Berri.
This would involve addressing a range of unresolved issues, not limited to the Sayrafa platform alone, while waiting for the appointment of a new central bank governor, whom the "system" prefers to be someone with a clean track record.