TROUBLING FACTS: the cost of the dire economic condition is devastating!
Salameh has repeatedly overstated the strength and stability of the monetary system in Lebanon despite the compelling evidence of a dire economic situation and financial instability that overwhelmed the low-and-high-income workers across Lebanon.
A rampant corruption, a dire-overwhelming economy, a heavily indebted country, a dollar-restricted access, furloughs-and-layoffs-soaring numbers unified the people for the first time in Lebanon’s history. Forty-five years after the 1975 civil war that shattered the country and segregated its population, the Lebanese people took over the streets on November 17 of 2019 requesting the government’s dissolution. They demanded the Prime Minister resignation and called the CBL’s Governor out on his poor job over a fast-crumbling monetary system cover up.
The Change Rate of About 1507.50 to the Dollar in Place for Two Decade!
The seventy-year-old Riad Salameh, CBL’s governor since 1993, said to a Reuter’s reporter last year that the Lebanese pound (Lira) is strong. Later that year, he doubled down on his remarks assuring to Bloomberg TV that the Lebanese pound’s change rate will remain 1,507.50 to the dollar for more than two decades.
Interview With Bloomberg TV
On August 30, 2019, Governor Riad Salameh said in an interview with Bloomberg TV in Beirut that “Banque du Liban [CBL] remains committed to preserving the Lebanese pound’s peg [change rate] of about 1,507.5 to the dollar, in place for more than two decades, and has “ample” cash to do so.”
The reality is quit the opposite! The Lebanese pound’s peg in the black market has topped 3,900 pounds to the dollar in recent days. Salameh deceptively claimed “He has ample cash to do so” — to preserve the change rate of about 1507.50 to the dollar in place for two decade. The people feel appalled and angry to learn of his failure which has unleashed a blistering attack on his management of the financial crisis. In 2019, in an attempt to understate the severity of the crisis, Salameh assured that CBL isn’t on the verge of bankruptcy while he was preparing to impose austerity measures to battle the fiscal deficit caused by the political corruption, illicit enrichment and abuse of power. These bad practices generated a bottomless sinkhole of uncertainty and a disturbingly dark future for the entire Lebanese people.
Furthermore, he announced foreign currency restrictions in October 2019 to end the crisis and ordered wire transfers not to use dollars and imposed control on access to cash. This has deepened the economic crisis, sped up the devaluation of the Lebanese pound, and dangerously crippled the economy, bankrupt hundreds of small businesses, ripped tens of thousands of jobs off and produced equal number of unwaged employees.
on January 9th 2020, despite the fact he ruled out an imminent financial collapse, Salameh stepped in and asked Lebanon’s finance minister for “exceptional powers to issue necessary regulations” such as Capital Control, issuance of Eurobonds or Treasury Bonds to control the banking’s sector and deal with the growing financial crisis and the collapsed monetary system which had created a justifiable dismay among the small and big depositors.
Since depositors were no longer able to withdraw any amount of their savings in dollars nor individuals were able to cash their remittances in dollars, the currency in which they were originally transferred, can Salameh explain how big depositors, politicians and leaders of the country were able to move their money to foreign banks putting at great risk the monetary system?
On March 7, 2020, The New York Times published:
“Businesspeople in Lebanon’s import-dominated economy cannot get the dollars to bring in goods from abroad; Lebanese who are paid in pounds but owe tuition or mortgages in dollars are frantic, watching their spending power evaporate.”
We are witnessing unprecedented times; the financial crises are ramping up exponentially, unstoppable — unless turning the tables upside down.
The million dollars question is “why during his 27 years as CBL’s Governor, Riad Salameh kept assuring that the Lebanese pound is “Strong”? Was he shortsighted, inexperienced, unaware of the growing monetary instability? — certainly not — or was he deeply rooted in corruption and self-enrichment?
That, however, is yet to be proven!