Government, BDL Conflict Threatens Lebanon’s Exhausted Economy

Business

April 26th, 10:32am

Beirut- Ali Zayneddine

Asharq Al-Awsat

Lebanon’s financial markets are closely and tensely monitoring the recent outbreak of conflict between the country’s government, headed by Prime Minister Hassan Diab, and the monetary authority represented exclusively by the governor of Banque du Liban (BDL), Riad Salameh. Sources close to Salameh ruled out the BDL governor resigning voluntarily and said that he will soon address the host of accusations dished out by PM Diab. This has left the banking community on alert as to what this confrontation might lead to, and its impact on the already deteriorating financial and monetary conditions, especially with regard to Lebanon's urgent need for inflows from external sources that reduce the risk of scarcity of liquidity in foreign currencies. A senior financial sector official, who requested anonymity, said that exchanging blame for the current financial crisis between the government, BDL and the banking sector has derailed the national rescue plan and wasted any effort spent to salvage the national economy. The crisis, according to the official, threatens dramatic losses to the entire national wealth, this includes citizens’ savings, treasury resources, and the production cycle. Current circumstances created a dangerous deterioration on the living and social levels, with the abilities of the middle-income earners diminishing. The middle class, according to the official, has slipped below the poverty line. The official acknowledges that the monetary stability equation has fallen into a real spiral of anarchy overtaken by muddled dollar pricing. Local and foreign consensus on Lebanon's urgent need for external and immediate financial support, with a minimum estimate of about $15 billion, has not limited the collapse and the consideration of complex rescue options. “We started to feel risks that include the whole internal situation, due to the widening distances and spacing, the dispersal of efforts, and the violation of the country's economic identity and private ownership,” the official said.

from Asharq AL-awsat https://aawsat.com/english/home/article/2253571/government-bdl-conflict-threatens-lebanon%E2%80%99s-exhausted-economy