BDL Governorship shifts to deputy governors led by First Deputy Wassim Mansouri

In a significant development, the Banque du Liban (BDL) governorship's responsibilities will be handed over to the deputy governors, led by First Deputy Wassim Mansouri, as of Monday. 

He held a press conference on Monday morning, presenting the preliminary agreement reached with the government to extend the BDL's financing of the state for an additional three months through a conditional loan that the Cabinet and the Parliament must approve. 

This article was originally published in and translated by the Lebanese newspaper Nidaa Al-Watan.

Among the conditions, the government is committed to refunding the borrowed amount from the mandatory reserves linked to the 2024 budget, which is expected to generate substantial revenues. 

Additionally, the Parliament must pass laws related to "capital control," banking restructuring, addressing the losses and deposits gap, and the Finance Ministry needs to commit to a tax reform whereby public treasury revenues are increased qualitatively, therefore eliminating the need for any financing from the BDL. 

Sources close to the deputy governors confirmed that starting Tuesday, the BDL will not disburse a single dollar before the approval of the loan agreement legislation and its submission to the Parliament for adoption within a few weeks before August. In case of any deviation from this condition, the government may find itself without the necessary dollars to pay salaries on the Sayrafa exchange rate, medicine prices, and other essential expenses.

Furthermore, sources added that after the initial three-month period, the deputy governors may resign once again if the legislation is not adopted. It is worth noting that Wassim Mansouri has been under political and sectarian pressure from his leadership to resign. 

The sources do not rule out this possibility as the reforms face significant disagreements among most parliamentary blocs and political parties, shirking their responsibilities. The more worrying scenario is the failure to adopt the loan agreement legislation, in which case the resignation might occur again before August, leading the country into uncertainty.

Regarding the new platform, sources revealed ongoing negotiations with "Bloomberg" and "Reuters" to choose between two offers. 

Governor Riad Salameh declined to sign the measures requested by the deputy governors to cancel the current Sayrafa platform and referred them to Finance Minister Youssef Khalil, who will meet with them on Tuesday for this purpose. 

According to the sources, there are intense pressures from banking, political, and commercial "lobbies" to maintain the current platform, which benefits a fortunate and influential group, including traders, importers, bankers, and speculators, more than it helps public sector employees and depositors.

If the plans of the deputy governors proceed with the necessary assistance from the Finance Ministry, just a few weeks will be enough to put in place the required logistics and conduct training. 

Moreover, the deputy governors and the International Monetary Fund (IMF) currently review discussions on governance and transparency texts. 

As part of the preliminary agreement with Lebanon, the IMF has included unifying the exchange rate, followed by adopting a flexible exchange rate based on market demand and supply, with limited intervention by the BDL during extreme circumstances. This could result in the dollar's value rising to its fair value, determined by the monetary mass in the lira against the demand for both dollars and lira.