Deputy Prime Minister of the caretaker government, Dr. Saadeh al-Chami, confirmed that he had previously asked the Central Bank Governor, Riad Salameh, to resign as he holds a critical position in the monetary authority, and suspicions should not surround him.
Additionally, he faces domestic and international legal cases, including from Interpol and 190 countries worldwide. It would have been his and the country's best interest to resign and focus on defending himself. If he refuses to resign, at the very least, he should step aside from his position of authority until the end of his term. However, it seems evident that this will not happen.
Dr. al-Chami stated that the governor's deputies are faced with challenging tasks, and according to Article 25 of the Monetary and Credit Law, in case of a vacancy, the first deputy assumes responsibility by proxy. This means that the first deputy is responsible for managing the monetary policy. Therefore, it is not fair to hold him unaccountable.
He expressed concern about the financial, monetary, and economic conditions, which may worsen if decisive actions are not taken to address them on all fronts. The political complexities persist with the presidential vacancy, the caretaker government, and the sluggish legislative process in the parliament. He emphasized that electing a president does not automatically resolve the crisis; it requires a unified will to implement the necessary reforms, as agreed with the International Monetary Fund (IMF) after signing the preliminary agreement.
As the head of the negotiating delegation with the IMF, Dr. al-Chami pointed out that the latest IMF report does not bring any new information; it describes Lebanon's situation as deteriorating, as it has been previously stated. He expressed his concerns about the future if action is not taken in the coming period, which is difficult to predict. The Central Bank of Lebanon reserves are expected to deplete in the not-so-distant future, which is a severe indicator.
In response to a question, he said that there are solutions, and the International Monetary Fund (IMF) is one of them. If all the required measures for Lebanon are reformative and necessary, we should ask for them from ourselves before anyone else does. If these reforms are beneficial, it is better to implement them with external assistance than without it. Therefore, he emphasized the importance of the IMF because it provides several opportunities. It will offer Lebanon $3 billion over four years, and the donor countries will contribute between $8 and $10 billion.
Dr. al-Chami clarified that the multidimensional crisis requires addressing it on all fronts. Thus, the primary goal of the government, as stated in its ministerial statement, was to prepare a comprehensive economic and financial program and discuss it with the IMF to reach an agreement with them. The preparation and discussions took several months until they reached a preliminary agreement concerning employees.
He stressed the significance of reaching a preliminary agreement with the IMF, considering it an achievement for the government. However, only half of the previously mentioned preconditions have been implemented. The remaining preconditions still need to be submitted in the parliament and the Central Bank of Lebanon, preventing them from reaching a final agreement with the IMF.
Regarding the recovery plan he developed, which included canceling some bank deposits at the Central Bank, the State Shura Council invalidated this decision, considering it detrimental to depositors' funds. Dr. al-Chami promptly refuted such claims, stating that many analysts and experts wrongly interpreted the plan as intending to cancel deposits. The actual aim is to transfer some deposits out of the Central Bank and place them in a deposit recovery fund, freeing banks from toxic assets and eventually returning the deposits to their owners, based on the seriousness and speed of implementing necessary reforms.
He clarified that depositors' funds are their rightful property. Accounts with balances of $100,000 or less will be refunded relatively quickly if reforms are initiated. Accounts exceeding $100,000 will be directed to the deposit recovery fund, which will yield returns over time.
Regarding the 2023 budget, which might involve increases in fees, taxes, and the exchange rate if the "Sayrafa" platform is canceled, Dr. al-Chami mentioned that the budget has not yet been discussed in the cabinet. However, there is a tendency to apply the Sayrafa rate to customs duties. Additionally, some deputies of the Central Bank governor desire to cancel Sayrafa and replace it with an electronic platform and a unified exchange rate.
As for covering the deficit in the new budget, which is said to exceed that of 2022, Dr. al-Chami stated that when an agreement is reached with the IMF, they will provide assistance to finance the budget deficit. In this scenario, Lebanon will not need to finance the deficit through the Central Bank of Lebanon by printing currency, thus avoiding a depreciation of the exchange rate and inflation.