Lebanon’s Central Bank Denied Claims Of Bankruptcy

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UAB

On Monday, Lebanon’s Central Bank Governor, Riad Salameh, denied the “rumors” emerging around the bankruptcy of the Lebanese state and the Central Bank.

The Central Bank of Lebanon (BDL) then issued the following statement: “The Governor of the Lebanese Central Bank, Riad Salameh, would like to clarify that circulated rumors about the bankruptcy of the Central Bank are incorrect.”

Adding, “Despite the losses that afflicted the financial sector in Lebanon, which will be dealt with in the recovery plan that is currently being prepared by the Lebanese government in cooperation with the International Monetary Fund, the Central Bank still exercises the role entrusted to it under Article 70 of the Code of Money and Credit, and will continue to do so.”

The statement was issued as a response to the comments of the Deputy Prime Minister, Saadeh Al-Shami, on Sunday, deemed as “taken out of context.” Al-Shami has issued during a TV appearance that “unfortunately, the state is bankrupt, as is the Central Bank.”

In an attempt to explain his deputy’s statement, Prime Minister Najib Mikati later said that Al-Shami meant that Lebanon is facing a liquidity issue and not the inability to meet long-term liabilities.

“I do not get the fuss around Lebanon’s deputy prime minister saying that Lebanon is bankrupt,” commented the financial analyst Omar Tamo.

“Lebanon officially defaulted on its foreign currency debt (Eurobonds) in March 2020, and we have been talking about the $60-70 billion losses for more than two years,” he noted.

At the start of the economic collapse, Lebanese banks imposed informal capital control, locking people out of their savings and funds.

Per the Deputy Prime Minister’s comments on Sunday, the depositors will also bear the consequences of the “bankruptcy”, as the losses will be distributed between the Lebanese state, the Central Bank, and the depositors.

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Lebanon's Central Bank Denied Claims Of Bankruptcy

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