Dubai – Reuters: Lebanese Finance Minister Youssef Khalil said that replacing the governor of the Central Bank of Lebanon, Riad Salameh, who has held the position for three decades, will be difficult, and his term may be extended, although no consensus has been reached on this yet.
Salame said this month that he would not seek a new term. His current six-year term ends in July. European and Lebanese prosecutors are investigating Salameh over alleged embezzlement of hundreds of millions of dollars from public funds, an accusation he denies.
Asked if discussions about a potential successor have begun, Khalil told Reuters that there is still no consensus on this issue, noting that the current political climate in Lebanon makes such a major change particularly difficult.
He added, on the sidelines of the World Government Summit in Dubai a few days ago, that there might be a plan to extend the terms of all first-level public service employees, not just safety, but there is no consensus on that yet.
Khalil also said that the agreement with the International Monetary Fund remains a priority, even if it is not supported by some. He acknowledged that the agreement did not enjoy the support of all the Lebanese, but stressed the importance of building confidence and putting Lebanon on the road to recovery. Beirut signed a draft agreement with the fund in April, but the slow pace of implementation of reforms requested by the fund to obtain financing to ease the impact of the three-year economic collapse that has plunged the vast majority of the population into poverty.
Caretaker Prime Minister Najib Mikati said in November that Lebanon could still complete a $3 billion bailout deal despite the lack of a fully empowered president or parliament.
The government reduced the official exchange rate of the local currency by 90 percent on February 1 to 15,000 pounds to the US dollar for the first time in nearly three decades.
At that time, the value of the lira in the parallel market was just under 60,000 against the dollar. Since then, it has plunged rapidly to an all-time low of 80,000 against the dollar, causing protests, burning of bank branches and road closures on Thursday.
Khalil said that he faced what he described as serious resistance when he tried to officially devalue the local currency months ago, but the government still plans to unify the exchange rate and move to collect taxes and fees on the basis of a rate closer to the parallel market.
He added that parliament still intends to pass a capital control law after years of delay as a way to protect banks from lawsuits, which he described as very huge, and to preserve foreign currency in the country.
Khalil said that the level of confidence in the Lebanese banking system is very low, and added that he believes that the way to build that confidence lies in the agreement with the IMF.
