Lebanon's Central Bank can subsidize basic commodities for two more months

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Lebanon’s central bank can only subsidize essential commodities, including fuel, medicine, and flour, for two more months, the bank’s governor said Tuesday.

Asked what needed to be done, Riad Salameh said the state needed to develop a plan.

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Salameh also responded to recent accusations over his alleged role in corruption.

“I am carrying out my duty in serving the Lebanese, and the accusations leveled against me are incorrect; I am not corrupt, I am independent and not partisan," he said during an interview with Al Hadath.

He defended the central bank's work and said that it was not responsible for how successive governments used the money provided by the bank.

As for the forensic audit of the central bank, Salameh said the bank would have no issue granting access to Lebanese government accounts. But, he said this was not possible without a change in legislation.

"We are with the audit, and we have handed over our accounts, and we will commit to handing over the state accounts to the Ministry of Finance in preparation for the forensic audit," he said.

Lebanon is facing an unprecedented economic and financial crisis due to several factors. The economic collapse and devaluation of the Lebanese currency were exacerbated following the nationwide anti-government protests in October 2019.

This was followed by the coronavirus pandemic, which forced the already-struggling businesses to shut down.

Then the Aug. 4 Port of Beirut blast devastated what was left of the country’s economy and destroyed large swathes of the Lebanese capital.

Salameh also revealed $30 billion in deposits were withdrawn from Lebanese banks over the last 12 months.

With banks struggling to provide any access to the greenback, Salameh said that there would be a reorganization and selling of Lebanese banks who fail to increase their capital by February.

The central bank will acquire shares of banks that are not committed to raising their capital.

Turning to the plummeting Lebanese pound, which has seen several different values on the black market, Salameh called on lawmakers to work with the central bank in order to create a new policy related to the exchange rate.

The Lebanese pound has been pegged to the US dollar since 1997, at 1,507.5. It has consistently traded among currency exchange dealers at a rate above 7,000 since the Beirut blast.

Salameh also took the opportunity to play down reports that the central bank was being targeted by US sanctions for its role in corruption.

“The bank has done everything necessary to remain involved in financial globalization, including abiding by all US regulations,” he said.

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