BEIRUT — The governor of Lebanon's central bank
reassured depositors on Thursday that it was not bankrupt and that people's
deposits were safe and would be returned soon, after reversing a decision to
stop withdrawals that triggered street protests.
اضافة اعلان
Angry Lebanese took to the streets late on Wednesday over a
central bank announcement that withdrawals from dollar deposits at a fixed rate
— much lower than on the informal market though higher than the official peg —
would be halted.
"A decision to regard Circular 151 issued by the
central bank as still in force has been made," the presidency said in a
statement after a meeting that included Salameh.
Lebanese banks have locked depositors out of their dollar
accounts and blocked transfers abroad. But under Circular 151 issued last year,
depositors have been permitted to withdraw dollars, with the funds paid in the
local currency at a rate of 3,900 pounds to the greenback.
That is only about a third of the value of dollars on the
black market — which on Thursday were traded at around 13,000 pounds to the
dollar — but it has been the only way many Lebanese have been able to access
their funds.
The official peg is set at 1,500 pounds to the dollar.
Lebanon is in the throes of a deep financial crisis, wrought
by decades of endemic corruption, waste, and mismanagement, that is threatening
its stability and is described by the World Bank as one of the deepest
depressions in modern history.
In a report this week, the World Bank forecast that
Lebanon's gross domestic product, which has already shrunk from $55 billion in
2018 to an estimated $33 billion last year, would contract by a further 9.5
percent in 2021.
The World Bank added that the crisis, which has led to
shortages of basic imported goods, was being aggravated by a "debilitating
institutional void" caused by high-level political deadlock.
The late night Wednesday decision to stop the withdrawals
provoked indignation with protesters in Beirut blocking roads with burning tires
and people lining up in front of ATMs to withdraw cash before the regulation
took effect.
A senior official source, who declined to be named due to
the sensitivity of the issue, said the move to halt withdrawals and then
backpedal from it was a political maneuver to encourage depositors to be
satisfied with a fixed rate still leaving them with a big loss on their money.
70 percent loss on deposits
When the circular was issued last year Lebanon's black
market rate was around half of what it is now, and there have been calls for
the bank to raise the fixed rate.
"So now people are begging for a 70 percent loss on the
value of their deposit," economic analyst Dan Azzi said.
The financial crisis has wiped out jobs, raised concerns for
growing hunger and put more than half of the Lebanese population below the
poverty line. The Lebanese pound has lost around 90 percent of its value since
late 2019.
The central bank's foreign reserves, which have been used to
subsidize basic goods such as fuel, medicine and wheat, have dropped from over
$30 billion prior to the crisis to around $15 billion in March.
"There is a major banking crisis and none of the
perpetrators have been punished, on the contrary they have been allowed
whatever they want to do and the perpetrators are the central bank and the
commercial banks," said Toufic Gaspard, an economist who has worked as an
adviser at the IMF and to a former finance minister.
Political paralysis is complicating the economic meltdown
with fractious political leaders unable to agree a new cabinet capable of
implementing reforms required to unlock foreign aid.
Lebanon has lacked a government — the current one is acting
in a caretaker capacity — since just after a massive blast in Beirut's port
last August that wrecked swathes of the capital.
Caretaker Prime Minister Hassan Diab urged politicians on
Wednesday to set aside differences and form a government capable of reengaging
the International Monetary Fund before "total collapse" ensues.
Prime Minister-designate Saad Al-Hariri, who is backed by
Western governments, has been at loggerheads with President Michel Aoun for
months over naming ministers.
Aoun, a Christian, is an ally of Lebanon's powerful
Iran-backed Shiite Muslim movement Hezbollah, listed as a terrorist group by
the United States.
Hariri, a veteran Sunni Muslim politician, has
said the only way out of Lebanon's crisis is through mending relations with its
Arab neighbors. Gulf states, including Saudi Arabia, have been loath to offer
aid to ease Beirut's economic woes, keeping their distance in alarm over the
rising influence of Hezbollah.
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