Central Bank of Lebanon Governor Riad Salameh said that the central bank’s foreign exchange reserves have decreased by $2.2 billion since the beginning of 2022 to about $11 billion, representing a third of the reserves three years ago.
Salameh made his comments in a taped interview with LBCI, the Lebanese television channel.
But when the interview was broadcast on Tuesday, security forces were raiding a house he owned in northeastern Beirut as part of a judicial investigation into allegations of misconduct and corruption.
Salameh added that the central bank will propose to the new cabinet, if it is formed, a law to issue currency in larger denominations to facilitate the use of the lira in light of the devaluation of the currency.
He continued, “As soon as the new government is formed, we will send a proposal to be enacted in a law so that it becomes in larger categories in the Lebanese pound, in order to facilitate the use of the pound… meaning removing zeros from the currency similar to (what happened in Turkey).”
Salameh confirmed that he supports maintaining banking secrecy in Lebanon, where banks have severely restricted the access of most depositors to hard currency.
These statements contradict the position of the Lebanese Deputy Prime Minister, HE Al-Shami, who told “Reuters” earlier that he does not see any benefits to maintaining banking secrecy in the country.
On the other hand, Lebanese banks said that a draft agreement reached by the government with the International Monetary Fund was “illegal” and “unconstitutional” in a letter sent by an adviser to the Association of Banks in Lebanon to the IMF and seen by “Reuters”.
An expert-level agreement between the IMF and Lebanon provides for $3 billion in financing over four years to help the small country recover from a financial collapse in which the local currency lost more than 90% of its value and pushed most of the Lebanese into poverty.
According to the IMF, a final agreement is conditional on the implementation of a number of measures, including the adoption of a strategy to restructure the banking sector that “recognizes the large losses in the sector and addresses them strictly while protecting small depositors and limiting the resort to public resources.”
The draft agreement also calls on the Lebanese parliament to approve an amendment to the banking secrecy law and to conduct an accounting audit of the country’s 14 largest banks.