Lebanese PM urges central bank’s governor to publicly explain rapid fall of pound

Lebanese Prime Minister Hassan Diab accused on Friday the central bank’s governor of adopting a “mysterious” approach in dealing with the U.S. dollar crisis in the country, MTV local TV channel reported.

“The behavior of the central bank’s governor is very mysterious and it is causing further deterioration in the country by exacerbating the social disaster,” Diab said in a televised speech following a cabinet meeting.

The price of the dollar to the Lebanese pound has increased on Thursday to unprecedented levels, causing concerns among the Lebanese whose purchasing power has dropped tremendously due to the devaluation of their salaries mostly paid in Lebanese pounds whereas Lebanon imports most of its products in U.S. dollars.

Diab urged the central bank’s governor Riad Salameh to address the Lebanese people honestly and transparently about the current situation and the reasons behind this deterioration.

He pointed out that there are a lot of gaps in the central bank’s strategy and monetary policy.

“I have information about losses amounting to 7 billion dollars incurred by the central bank since the start of this year,” Diab said.

He noted that there were 5.7 billion dollars that have been transferred out of Lebanese banks to foreign banks during January and February despite restrictions by banks on cash withdrawals or transfers.

Lebanon has witnessed in the past few months a shortage in dollars caused by economic slowdown and the drop in cash injections from Lebanese abroad, in addition to transfers by big depositors to foreign countries, reducing the central bank’s foreign currency reserves and leading to a shortage in dollar for businesses and individuals.

Hence, banks put restrictions on cash withdrawals by people and their transfers from Lebanese pounds to dollars, creating panic among depositors.

This has caused demands on the U.S. currency to increase, leading to an increase in its price to the Lebanese pound.