Salameh Reiterates Central Bank ‘Won’t Use Obligatory Reserves’

Governor of Central Bank of Lebanon Riad Salameh reiterated in remarks to Sky News Arabia on Tuesday, that the bank can not use all its obligatory foreign reserves to subsidize medicine, oil and wheat once it reaches the minimum threshold.

“Our reserves amount to 19.5 billion dollars. We will try to keep subsidizing medicine, oil, flour and food as much as we can, but the Central Bank is not prepared to use all its obligatory reserves,” Salameh told Sky News Arabia in televised remarks.

Late in August, Salameh made the same warning that the bank cannot continue using its foreign currency reserves to finance trade, signaling he may soon be unable to sustain subsidies on basic goods.

He voiced hopes the upcoming government would “work hard to solve Lebanon’s multiple crises, and be able to enforce reforms quickly to meet our efforts on the monetary level.”

Lebanon picked a new PM on Monday after the resignation of PM Hassan Diab over the devastating Beirut port explosion.

On funds transferred abroad from Lebanese banks after the October 17 anti-government uprising, the governor stressed: “At least 30 percent of funds transferred from Lebanese banks must be returned,” noting that contacts with the French central bank, Bank of France, were made to send experts to audit the Lebanese central bank.

Salameh, who has held the post since 1993, has come under scathing criticism by many who hold him — along with the country's ruling class —responsible for Lebanon's severe financial crisis and collapse of the national currency which started late last year. The currency has lost about 70% of its value on the black market since the beginning of the year, with the rapid devaluation fueling inflation and plunging tens of thousands of people into unemployment and poverty.

Salameh has deflected blame and said he did what he had to do to maintain Lebanon's monetary stability in the face of various crises over the past years. He blames politicians for reneging on repeated promises of reform.

The government has resigned in the wake of the Aug. 4 catastrophic explosion at Beirut port that killed and wounded thousands of people and caused widespread damage to the facility and parts of the capital estimated to be between $10-$15 billion.