Lebanon’s new central bank head says reforms planned to deal with economy

Wassim Mansouri is to take over as interim chief of Lebanon’s central bank after Riad Salameh steps down.

The Lebanese central bank’s new interim chief has urged the government to undertake long-delayed reforms as he confirmed he would take over as its acting head, replacing longtime chief Riad Salameh.

Wassim Mansouri, the vice governor of the Banque du Liban or central bank, is due to take over from Salameh on Tuesday after political factions failed to appoint a successor to Salameh, despite the instability this could cause Lebanon amid a four-year-long financial crisis.

Riad Salameh leaves office after a 30-year tenure, tarnished by an economic meltdown that has impoverished many Lebanese and paralysed a once sprawling banking system, as well as charges of corruption against him at home and abroad – which he denies.

Speaking at a news conference, Mansouri said the new Banque du Liban leadership planned to impose severe restrictions on the central bank’s lending to the government and that such funding should be gradually stopped in its entirety.

He added that the authorities should also phase out a controversial exchange platform known as Sayrafa and lift the peg on the local currency.

“We are facing a crossroads,” Mansouri said, promising he would not sign off on any government financing that he was not convinced by and that was “outside the legal framework”.

Mansouri’s appointment

The failure to appoint a new bank governor reflects wider dysfunction that has left Lebanon with neither a fully empowered government nor a president, further hollowing out a state crippled by a four-year-old financial freefall.

Ruling politicians have taken scant action to begin addressing the financial collapse, widely blamed on decades of profligate spending and corruption overseen by long-dominant sectarian factions.

The International Monetary Fund said in June that the crisis had been aggravated by vested interests resisting crucial reforms.

Mansouri, who is trained as a lawyer and worked as a legal consultant to the finance ministry and to parliament in recent years, said this was Lebanon’s “last chance” to enact changes. His reforms include setting up a capital control law, a financial restructuring law and a 2023 state budget within six months.

The central bank leadership is selected via a sectarian power-sharing system that governs other top posts in Lebanon. Mansouri was appointed, along with three other vice governors, in June 2020.

Mansouri is a Shia Muslim, while the central bank governorship is traditionally reserved for Maronite Christians.

The downfall of Salameh

Once feted as a financial wizard, former central bank chief Riad Salameh left the post he held for three decades on Monday surrounded by a group of his followers, who celebrated him with traditional music and dancing.

However, while he was widely viewed as the linchpin of the financial system until it imploded in 2019, Salameh saw his standing crumble as the meltdown impoverished many Lebanese and froze most savers out of their deposits kept in banks, leading to several incidents where depositors held up banks demanding the release of their money.

His image was further tarnished as one European country after another began investigating whether he abused his powers to embezzle Lebanese public money.

Salameh has denied wrongdoing, and said days before his departure that he had “worked according to the law and respected the legal rights of others” during his tenure.

In May, French and German authorities issued warrants for his arrest. Interpol Red Notices declared him wanted by both countries.

Defending his tenure in an interview on Wednesday, Salameh said he had been made a scapegoat for the meltdown, claiming that the government – not the central bank – was responsible for spending public funds.

“I am going to turn a page of my life,” he said.