FutureStarr

Lebanon's Finance Minister Says Difficult to Replace Central Bank Head Salameh

Lebanon's Finance Minister Says Difficult to Replace Central Bank Head Salameh

blog_img

Lebanons finance minister says difficult to replace central bank head Sala

Lebanon's finance minister says it will be difficult to replace central bank head Riad Salameh. The country's long-time governor is under investigation by European and Lebanese prosecutors for alleged embezzlement of hundreds of millions of dollars in public funds.

He is also being accused of supervising the central bank's unconventional financial engineering activities. The International Monetary Fund (IMF) is pushing for deep banking reforms in the country, but the minister maintains they are not his top priority.

Youssef Khalil

Youssef Khalil is a Lebanese politician and senior official at the Central Bank of Lebanon (BDL). He's widely regarded as close to Riad Salameh, chief economist, and architect of BDL's financial engineering. With a Ph.D in Economics from CERDIS (Center for Studies and Research on International Development) in France and a Masters in Economic Development from University of Sussex (United Kingdom), Khalil holds an impressive list of qualifications.

Early this year, Mr Khalil was appointed finance minister of Prime Minister Najib Mikati's cabinet - part of a newly formed government which has been dogged by political disagreements. He will likely serve as the point person for discussions with the International Monetary Fund (IMF) regarding an emergency bailout package.

Khalil's appointment comes a year after his predecessors' government collapsed amid deep economic difficulties and political unrest. To secure a $3 billion loan from the International Monetary Fund (IMF), he must implement reforms requested by the IMF.

Khalil will have to address the recovery of depositors whose funds have been frozen during the crisis. He assured reporters that he will ensure that repayment does not fall solely upon the government.

He noted that the country is expected to suffer $72 billion in losses from its financial system, yet no plan has been put together yet for recovering these deposits.

On Tuesday, central bank governor Riad Salameh extended Circular 161 which permits banks to inject additional US dollars into the currency market and enable their clients to withdraw up to the monthly withdrawal limit in lira. Furthermore, banks can purchase as many US dollars from the central bank at any time in exchange for lira held in their accounts or those of their clients at the prevailing Sayrafa rate.

Some experts questioned the timing of this decision and whether it would be implemented without being part of an overall economic recovery plan. Furthermore, they expressed uncertainty as to how it would impact prices and citizens' livelihoods.

Riad Salameh

Riad Salameh, Lebanon's central bank head for almost 30 years, was widely seen as the protector of financial sector and source of national pride. Additionally, his role in maintaining Lebanon's currency peg had been critical. But in late 2019, Lebanon faced an unprecedented crisis caused by decades of corruption and mismanagement.

The financial collapse caused an economic meltdown and bankruptcies across the board. Furthermore, the currency has lost over 90% of its value since 2019.

Salameh, 71 years old, remains in his job despite receiving extensive political backing and immunity from legal action in Lebanese courts. As architect of a monetary system that has served the interests of political elites, his downfall could ignite widespread protests across Lebanon.

Salameh is under investigation by French, German and Luxembourg prosecutors who are probing money laundering and embezzlement in Lebanon between 2002 and 2021. They are looking into a suspected transfer of hundreds of millions of dollars to a brokerage firm owned by Salameh's brother.

Additionally, several companies are being investigated for their connections to Salameh. The investigation focuses on the partnership between the central bank and Forry Associates Ltd, a British Virgin Islands-based brokerage company which listed Raja Salameh as its beneficiary.

State Security officers searched Salameh's homes and office earlier this month in an effort to uncover evidence in his case. A warrant had been issued by Mount Lebanon General Prosecutor Ghada Aoun, accusing Salameh of falsifying the central bank budget to conceal losses.

Aoun had requested the court to impose an asset freeze and travel ban against Salameh, due to her belief that he had committed embezzlement. She is debating whether she should attempt another arrest of him but hasn't made up her mind yet.

Media reports in Lebanon have suggested that Salameh's arrest could spark sectarian tensions, with many commentators worried that he is being shielded by various groups such as the army, non-governmental organizations (NGOs), armed forces, charities, sports clubs and universities.

The Lebanese economy

The Lebanese economy has long been driven by the private sector. Unfortunately, with the collapse of Lebanon's currency peg in 2010, inflation became severe and Riad Salameh, head of Lebanon's central bank, has not been able to control it.

The economy is facing a large debt pile and lackluster growth, compounding the already dire socioeconomic conditions. This has caused widespread loss of confidence among consumers and businesses alike.

Due to this, an increasing number of people are leaving the job market and moving elsewhere. This has caused a massive loss in wealth, making it difficult to afford basic necessities like food.

Due to these developments, the Lebanese economy is facing a crisis. A World Bank report states that conditions in Lebanon are worse than ever before in a century and a "lost decade" could ensue unless government and parliament make progress on needed fiscal, financial, social and governance reforms soon.

In this regard, the government and parliament must take the initiative in implementing a necessary fiscal adjustment program. This would include tax reforms and modernization, expenditure rationalization, privatization, improved debt management, as well as addressing structural challenges facing the economy.

International aid and private investment will be necessary for Lebanon's economy to recover and rebuild. However, how quickly these reforms can be implemented by the authorities and Lebanese parliament depends on whether they implement fiscal, financial, social, and governance reforms that are essential for recovery and reconstruction.

In Lebanon, the banking sector has been widely blamed for contributing to an economic and financial meltdown that has weakened the Lebanese currency and prevented access to international credit markets. This has undermined government efforts to secure billions of dollars in needed financial assistance from international organizations like the International Monetary Fund or other creditors.

The government must address the banking sector's role in the crisis, which will help stabilize the Lira and open up Turkey's financial system. Furthermore, this will reduce Turkey's growing public debt load - now at over 150% of GDP - further straining public finances.

The IMF

The International Monetary Fund (IMF) is an organization that encourages financial stability in member countries and assists governments with policy reforms. It receives quota subscriptions from 190 countries with voting rights based on their economies' size, as well as managing Special Drawing Rights (SDRs), valued based on a basket of four major currencies.

The IMF is also charged with upholding the rule of law and combatting corruption and money laundering. Its staff conduct research on various topics and offer advice on monetary, fiscal, and trade policies.

However, the IMF has been criticized for being too ambitious and intrusive in some instances. Its interventions in poor countries are often seen as a waste of time and resources, with critics asserting that its "mission creep" has resulted in an unnecessary expansion of its mandate.

In 2019, Lebanon's economy collapsed, leading to an unprecedented economic crisis and currency default. Those with savings in Lebanese currency lost billions of dollars.

Thus, more than half the population lives in poverty and is unemployed. Furthermore, the country's government faces crippling deficits.

One reason for the worsening crisis in Lebanon is that its banking sector has suffered substantial losses in US dollars since January 2019. As a result, the Lebanese pound's value has plummeted and foreign exchange reserves have been drastically diminished.

Another factor contributing to the financial crisis in Lebanon is that its banks primarily depend on deposit income with few debt markets to back them up. Due to the decline in the dollar value, Lebanon's economy has been severely hit and it faces difficulty repaying its foreign loans.

Desperate Venezuela's economy is heavily reliant on imports, which has lead to high inflation rates and increases in prices for basic necessities like food, fuel, and clothing. This has forced people to turn to cash which sparked a series of protests across the country.

Related Articles

  • Related Blog Image

    NoCap - 40 Some Flow's Official Video

    Explore
    Author Profile Image
    March 02, 2023     |     Future Starr
  • Related Blog Image

    Sienna's Birthday Bash - How Ciara and Russell Pulled Off the Ultimate Ninja Party

    Explore
    Author Profile Image
    May 02, 2023     |     Future Starr
  • Related Blog Image

    Nottingham Forest Steals a Point Off Wasteful Manchester City

    Explore
    Author Profile Image
    February 19, 2023     |     Future Starr
  • Related Blog Image

    Wordle or Wordall - A Fun Web-Based Word Game That Goes Viral Early This Year

    Explore
    Author Profile Image
    March 10, 2023     |     Future Starr
  • Related Blog Image

    Why Sugarhill Ddot's Let Ha Go Video is the Perfect Summer Jam

    Explore
    Author Profile Image
    April 22, 2023     |     Future Starr
  • Related Blog Image

    Is Drake Ready To Leave Hip Hop?

    Explore
    Author Profile Image
    January 24, 2022     |     Future Starr
  • Related Blog Image

    With Astonishing CAGR Entertainment Market Generate Revenue at Significant Basis - 2021-2025

    Explore
    Author Profile Image
    February 26, 2023     |     Future Starr
  • Related Blog Image

    Ayesha Curry's Guide to Overcoming Public Embarrassment and Finding Inner Peace

    Explore
    Author Profile Image
    May 26, 2023     |     Future Starr
  • Related Blog Image

    Credit Union Professionals Earn New Titles at 6 Credit Unions

    Explore
    Author Profile Image
    March 29, 2023     |     Future Starr
  • Related Blog Image

    10 Reasons Why You Need to See Tiffany Haddish on Tour

    Explore
    Author Profile Image
    December 26, 2021     |     Future Starr
  • Related Blog Image

    McKinsey Starts Laying Off 1400 Jobs This Week

    Explore
    Author Profile Image
    March 29, 2023     |     Future Starr
  • Related Blog Image

    Marc Anthony's Wife Nadia Ferreira 23 Is Pregnant With His 7th Child

    Explore
    Author Profile Image
    February 15, 2023     |     Future Starr
  • Related Blog Image

    Lady Gaga Sued For Nonpayment of $500K Reward For Return of Dogs

    Explore
    Author Profile Image
    November 27, 2021     |     Future Starr
  • Related Blog Image

    West-Leading Stars Beat Golden Knights 3-2 in Shootout

    Explore
    Author Profile Image
    November 28, 2021     |     Future Starr
  • Related Blog Image

    Morgan Wallen's Label CEO Responded to Rumors Around Mississippi Concert

    Explore
    Author Profile Image
    April 25, 2023     |     Future Starr