He added: The work with circulars will remain in effect, unless a vote is passed on the capital law, then we will cancel all these circulars and become governed by the relationship between depositors and banks under the capital control law.
Asked about the reality of exchange rates, starting in February, Salameh replied: “We will have two rates, the 15,000 and the exchange rate. The unification of the exchange rate cannot be done in one fell swoop, so this will be the first phase until the exchange becomes the one that determines the price.And whether this measure will lead to an increase or decrease in the exchange rate, he said the market is then the one that determines according to supply and demand, but the Banque du Liban will be on the lookout For example, today there are 70 trillion Lebanese pounds on the market, and we can raise all the pounds when we decide, because the markets know this, and if we decide, we can put in a billion dollars to drain the sterling market.
Salama felt that the exchange rate today is considered liberal, as transactions take place at fluctuating prices and the price of petrol also follows the market price. But even if the price becomes volatile, it is forbidden to see large fluctuations.
In an interview with Al-Hurra, the Governor of the Banque du Liban said: We are trying to manage the crisis through circulars, and the crisis was also facing challenges outside the scope of the Banque du Liban. So did Covid, which affected the world economy as a whole.
He explained that, according to recent statistics from the Banque du Liban, it emerged that there will be growth in the Lebanese economy in the year 2022, at a rate of 2%. And the movement of imports has increased and we saw economic movement last summer. The problem is in the public sector, which creates a burden on the economy, underlining the importance of addressing the situation in the sector at a time when we see just an emphasis on the private sector and the banking sector, forgetting the necessary reforms in the public sector.
Regarding the financing of the threefold increase in the salaries of public sector employees, he said: This is the responsibility of the state, not the Banque du Liban.
And he continued: Before the increase, salaries were £1 trillion 300 million, and they have become £3 trillion 300 million, which means that the Banque du Liban will pump in the next 3 months, retroactively $340 million.
And on how to secure this amount, he replied: We have developed our own methods through our dealings with the market through banks and other methods of securing dollars without undermining the central bank and in a way that does not lead us to the worst.
He explained that the Banque du Liban’s foreign assets are 10 billion and 300 million dollars that can be transacted abroad, with the exception of gold, and we do not call this required reserve, but external assets that we can dispose of abroad on a budget of 15 billion and 200 million. That is, there is a chance to move 10 billion 300 million outside.
And he continued: From the beginning of the year to date, the Banque du Liban’s assets have decreased by only 2 billion and 500 million dollars, and this means that financing has been secured in the private sector and in the public sector, and the decline in the euro exchange rate was tolerated because we have euros on our balance sheet.
Salama said the IMF had advised that hikes in the public sector be deliberate, meaning that the hikes hit employees, but there are employees who may be out of the country. Therefore, a review of the way the state is administered is needed, as the Bank of Lebanon is not the only one that can fix everything.
Salameh said: “Today, due to the increases, we need another £3 trillion 300 million. Imagine if we didn’t have Circular 161, so what would the dollar against pound exchange rate look like?! Today, quite the opposite , as many dollars will fall on the market, the dollar exchange rate should decrease or stabilize.
And about how he secured the dollars, he replied, We have our ways of intervening in the market, but contrary to what they say, we don’t withdraw dollars and keep them, but rather redistribute them, and this distribution goes to the people and not to importers and traders, as was the case before, i.e. during the subsidy period.
He said that we have our own plan to secure a wage increase, but we will pump dollars in the first stage, after which we will find ways to secure alternative dollars, but this does not eliminate the need for reforms.
Salameh confirmed that he will not finance the purchase of fuel for electricity from Central Bank reserves, and that the government is studying the possibility of opening credits with subsequent payment after six months, and will agree with us on how to guarantee support for these credits, provided they do not come from Central Bank reserves, and such amounts can be guaranteed by collection. We think they could raise something like $300 million.
Regarding the dissolution of the board of directors of Al Baraka Bank, Salameh said: “It is not the Bank of Lebanon that takes this decision, but rather the Supreme Banking Authority, after several sessions and after listening to them. He stresses that the circulars of the Banque du Liban are required to be applied, and banks that do not apply the generalities are referred to the Higher Banking Commission, which is an independent body from the Banque du Liban, and its decisions are not subject to review. He said the bank has a liquidity shortage and a capital shortage. He explained that the appointment of an interim manager at the bank is not meant to bring the bank out of business. We hope that the interim director will be able to secure the balance and that this attempt will be successful.
He added: The same reasons apply to the Federal Bank, and I can’t say more because of the existence of privacy, but what is certain is that the goal is not to make these banks fail. In response to the question of whether he plans to reduce the number of banks in Lebanon after the restructuring, he said: We believe it will reduce, but not significantly, because this question depends on the ability of bank owners to capitalize them.
On the fate of the deposits, Salama said: “We have endured all the negative propaganda not to bankrupt the banks and to save the deposits of depositors. He added that what is needed to return deposits is to guarantee liquidity and create an economic movement to repay deposits. This is what they call the recovery plan that the state should undertake. Regarding the plan presented by Prime Minister Mikati’s government, which talks about securing the first hundred thousand dollars of the deposit, Salameh said: “This is a plan to manage the payment of deposits, but to pay the deposits we must first secure liquidity. He added that the Banque du Liban has done everything to preserve deposits without bankruptcy.
In another context, Salama hoped to close this phase of his life after his term ended on July 31, and said that he did not appear before Judge Ghada Aoun in the cases filed against him because Judge Aoun still judged me before listening to me and from political or ideological contexts or certain interests. I am ready to appear before a judge who is not prejudiced against me.
Regarding the lawsuits filed against him abroad, he denied the existence of any lawsuits and said that there is a group in contact with a group in Lebanon that has provided news and carried out media campaigns to keep up with this news, and the prosecutor opens investigations, as happens in any country.
And if he reveals any names after the end of his mandate, he said: “I am committed to the law and to article 151 of the monetary and credit law, which prevents me from revealing what I have learned even after the end of my mandate. .”
