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Lebanon: interim central bank governor urges reform

July 31, 2023 at 11:09 am

The Central Bank of Lebanon [Karan Jain/Flickr]

The Lebanese Central Bank’s first vice governor Wassim Mansouri has urged the government to undertake long-delayed reforms as he confirmed that he will take over as its acting head from Tuesday, replacing long-time governor Riad Salameh, Reuters has reported. Mansouri is due to take over as interim governor after ruling factions failed to appoint a successor to Salameh despite a four-year-long financial crisis.

Salameh, 73, leaves office after a 30-year tenure tarnished by the meltdown that has impoverished many Lebanese and paralysed a once sprawling banking system, as well as corruption charges against him at home and abroad. He denies all of the charges.

Mansouri told a press conference that the new Central Bank leadership plans to impose severe restrictions on when it can lend money to the government and that such funding should be gradually stopped completely. He said that the authorities should also phase out a controversial exchange platform known as Sayrafa and lift the peg on the local currency.

“We are at a crossroads,” he explained, adding that he would not sign off on any government financing that he was not convinced by and which was “outside the legal framework.”

READ: Lebanon cabinet fails to select successor to Central Bank head as vacuum looms

The failure to appoint a new governor reflects wider dysfunction that has left Lebanon with neither a fully empowered government nor a president, further hollowing out a state paralysed by the four-year-old financial collapse. Ruling politicians have taken scant action to begin addressing the financial crisis, blamed widely on decades of profligate spending and corruption overseen by long-dominant sectarian factions.

The International Monetary Fund said in June that the crisis had been aggravated by vested interests resisting crucial reforms.

Mansouri, 51, called on the government to implement reforms including a capital control law, a financial restructuring law and a 2023 state budget within six months. This is Lebanon’s “last chance” to enact the changes, he insisted.

He was appointed along with three other vice governors in June 2020. The Central Bank leadership is selected via the sectarian power-sharing system that governs other top posts in Lebanon. Mansouri is a Shia Muslim. Under Lebanon’s sectarian power-sharing system, the governor should be a Maronite Catholic.

Nevertheless, he was nominated in 2020 by Parliament Speaker Nabih Berri, who heads the Shia Amal Movement, and is a distant cousin of Mansouri. The new interim governor was trained as a lawyer and worked as a legal consultant to the finance ministry and parliament in recent years, according to his biography on the Central Bank website.