mobanmarketBEIRUT: Cash-strapped Lebanon’s central bank governor Thursday said he would investigate reports of large transfers of money abroad, which if confirmed, would mark a violation of banking restrictions curtailing such transactions.
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“We will do everything premissable by law to investigate all transfers (abroad) that happened in 2019,” Riad Salameh said after a meeting with lawmakers in parliament.
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“If there are suspicious funds, we will be able to find out,” he told reporters.
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Salameh said that there has been a lot of talk about “politicians, senior civil servants and bank owners” involved in capital flight, adding however that a probe is necessary to identify those responsible.
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Faced with a grinding US dollar liquidity crisis, Lebanon’s banks have since September imposed increasingly tight restrictions on dollar withdrawals and transfers abroad in an attempt to conserve dwindling foreign currency reserves.
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This has fuelled tensions in the debt-ridden country, where a two-month-old protest movement is demanding the removal of political leaders deemed incompetent and corrupt.
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Activists say ordinary depositors are footing the bill for a liquidity crisis worsened by politicians, senior civil servants and bank owners who used their influence to get their hefty savings out of the country.
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Many of the country’s top leaders own, or have large shares in, several banks.
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After meeting Salameh on Thursday, Hasan Fadlallah, a member of powerful Shiite group Hezbollah’s parliamentary bloc, said they discussed ways of retrieving funds transferred abroad in violation of restrictions.
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“We are talking about $11 billion,” Fadlallah said, without specifying who carried out such transfers or when they took place.
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If funds are retrieved “we will have liquidity and this will allow regular citizens to access their money,” he added.
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As Lebanon’s protest movement enters its third month, demonstrators are increasingly targeting banks for trapping their savings.
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A report by the Carnegie think tank in November said that nearly $800 million left Lebanon between October 15 and November 7, when most citizens could not access their funds because banks was closed due to protests.
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As a result of informal capital controls, the unofficial value of the Lebanese pound against the dollar has dropped by around 30 per cent.
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The Lebanese currency has been pegged to the greenback at around 1,500 for two decades and the currencies are used interchangeably in daily life.
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Responding to a question about the future of the exchange rate of the Lebanese pound on the parallel market, Salameh told reporters: “No one knows.”
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The comments were uncharacteristic of the central bank governor, who has repeatedly maintained that the pound is stable.
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Lebanon’s current economic crisis is its worst since the 1975-1990 civil war.
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The faltering economy has also pushed many companies into bankruptcy, while others have laid off staff and slashed salaries.
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