Lebanon's Banks and Deposits Secure, Says Central Bank Governor

  • Economics
Lebanon's Banks and Deposits Secure, Says Central Bank Governor

Lebanon's banks will not go bankrupt and deposits are secure, central bank Governor Riad Salameh said Thursday in remarks aimed at reassuring depositors amid a deep financial crisis that has shaken confidence in the country's banking system.

Speaking to broadcaster MTV in his first extended remarks in nearly two months, Salameh said that foreign support was needed to pull the country from crisis and that Qatar appeared open to offering help.

"I believe the Qataris want to support Lebanon," he said, referencing a recent visit he made to Doha, before adding: "Contact between the two states is not the responsibility of the central bank."

Salameh said that contact with the International Monetary Fund (IMF) had been limited to talks with the prime minister over technical support.

"There has been no negotiation with the IMF by the Lebanese state to really know what conditions they would put," he said.

Foreign donors pledged $11 billion in project finance to Lebanon in 2018 but made it contingent on Beirut carrying out long-delayed economic reforms — something it has failed to do.

Fixed exchange rate

Salameh said the central bank remains convinced of its fixed exchange rate, which has kept the Lebanese pound pegged to the U.S. dollar at the same rate since 1997.

Since protests directed against the country's elite erupted on Oct. 17, Lebanon's pound has slumped by more than a third against the dollar on a parallel market.

Salameh said exchange rate stability was less costly for Lebanon, especially "given the country has no exports."

Looking to reassure jittery depositors that have been hit by tight capital controls since the unrest, Salameh said the central bank had $31 billion in liquidity and was ready to step in to secure liquidity demanded by banks for depositors.

Commercial banks have imposed stiff capital controls in recent months that include narrow limits on dollar withdrawals and are blocking most transfers abroad.

Salameh insisted that there would be no haircut on deposits, referring to a one-time reduction in their value.

Source: Reuters