There is no doubt that the Central Bank Governor's statement that was issued yesterday is almost the only positive news amid this multidimensional crisis that strikes the Lebanese on the economic, financial, monetary and social levels. What are the dimensions of this statement and its repercussions for the Lebanese citizen?
In an interview with MTV, an economic expert said, "This statement, which carries many positive news for citizens, comes in light of the Central Bank's strategy to restore confidence in the banking sector and the Lebanese pound."
The expert added, "Several positive points were mentioned in this statement, the first of which is the possibility of withdrawing money from deposits in hard currency, which is more than necessary to restore confidence in the banking sector. The presence of limits for withdrawals and legal conditions that govern the work of banks must be respected, which is a natural thing amid the crisis we are living in," as he stressed the importance and advisability of Circular No. 154, which allowed such a process, one year after halting the operation of giving dollars in cash to customers.
The support of the Lebanese pound was not absent from the Central Bank’s measures, according to the economic expert, who added: "Practically, the chaos that prevailed in the market, especially after the announcement of the suspension of payment of Eurobonds and the failure of negotiations with the IMF placed the Lebanese pound at the mercy of speculators on the black market. Speculation will be prevented, and thus the adopted exchange rate will be closer to reality and more transparent in terms of its composition. Even if the Central Bank does not intervene in the market, the exchange rate will remain transparent, unlike the black market price, which lacks transparency."
It is worth noting that the statement indicated that the platform will be open to institutions and individuals, which will restore confidence in the Lebanese pound and reduce the validity of the argument for relying on the black market.
On the other hand, the statement drew attention to the fact that the Central Bank asked the concerned ministries to rationalize subsidies, which suggests that the Central Bank does not intend to lift subsidies completely, which it indicated by stating that "the Central Bank of Lebanon is still securing the sale of dollars to banks at the official exchange rate for materials. The government decided to support it, and it is committed to selling these dollars at the official price for all appropriations approved by the official authorities, and the Central Bank carries out these operations daily and accordingly."
Regarding the statement’s praise of financial engineering, the expert said, "As recognized by both the World Bank and the International Monetary Fund in their reports, financial engineering saved Lebanon in 2016 and brought enough dollars to Lebanon to cross the current bleak phase in the hope that it will end quickly.”
The expert added, "The Central Bank's move at this critical stage is a blessed step through which the monetary policy was able to score points in the hope that the government's financial policy could score points, especially with regard to the citizen's food security and reactivate the economy."
On the impact of the statement on the Capital Control Law, which is being discussed today by the Finance and Budget Committee, the expert said, "The Central Bank has given the Finance and Budget Committee the limit of transfers, and therefore the committee cannot approve the (irrational) numbers in the leaked draft, which imposes a ruling to reduce these limits."
The expert also stated: "Fears that the political class intends to place obstacles in front of the Central Bank, with the aim of preventing Riad Salameh from recording achievements (filing lawsuits or defamation) at a time when the political authority has failed in all its files."
"It is in the interest of the political authority to keep pace with the plan by preventing smuggling and stopping the black market; this is in the interest of the Lebanese citizen by virtue of the fact that - the executive authority - is entrusted with the citizen's interest," the expert concluded.
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