Abu Dhabi, UAESaturday 30 May 2020

France intervenes to 'stop sacking' of Lebanon's under-pressure central bank governor

Prime Minister Hassan Diab questioned his performance after a steep fall in the pound currency

Riad Salameh the governor of Lebanon's central bank, speaks during a press conference in Beirut. AP
Riad Salameh the governor of Lebanon's central bank, speaks during a press conference in Beirut. AP

France has intervened in a brewing Lebanese crisis, advising the government not to lay off the under-pressure central bank governor after the country's currency plummeted, according to local media reports.

Prime Minister Hassan Diab on Friday expressed dismay at the currency's fall and questioned the performance of Riad Salameh.

He called on him to clearly explain to Lebanese where policy was headed.

Mr Diab said the crisis-hit country had suffered $7 billion in additional losses since the start of the year and that liquidity in the banking system was running out, with $5.7 billion in Lebanese deposits exiting in January and February.

Mr Diab said it was urgent that an economic reform plan, a draft of which emerged earlier this month, be quickly passed to avert further crisis.

But Paris reportedly stepped in to advise Mr Diab against any “reckless” move after allegations that he planned to dismiss the governor from his post over the deteriorating financial conditions, Al Joumhouria newspaper reported on Saturday.

The intervention was "direct", the newspaper reported, advising the Lebanese against such "an impulsive move" after reports emerged that Mr Salameh could be removed from his position.

The report did not state if France's message solely represented that of the French government or its allies as well, such as the United States or Britain.

Mr Salameh is being accused of contributing to heavy borrowing that led to the country's sovereign debt increasing and resulting in the country's first ever default in March.

Meanwhile, Lebanon will extend a coronavirus lockdown by two weeks until May 10 but Prime Minister Hassan Diab said on Friday the economy would be reopened in gradual phases over the coming weeks.

Already hit by a financial crisis that led to a sovereign debt default and a fall in the value of its currency, Lebanon has ordered most businesses to close, shut Beirut airport and imposed an overnight curfew to curb the spread of the novel coronavirus.

New infections have largely tapered off in recent weeks. Lebanon has recorded 696 coronavirus cases and 24 deaths so far, with the ministry of health reporting eight new cases on Friday.

"It is time for us to start reopening our country. We all want our normal lives back. People and companies are struggling," Mr Diab said, though warning that caution was still needed to avoid a second wave that could "destroy the country".

Mr Diab said the government had done a risk assessment on what sectors could be slowly relaunched in the coming weeks, without specifying which ones would come first.

Earlier on Friday Lebanon's higher defence council laid out a five-stage timetable for reopening the economy, with the first beginning on April 27 and the last on June 8.

Also on Friday, authorities closed all entrances to a Palestinian refugee camp in eastern Lebanon after four more people tested positive for the coronavirus, heightening concerns the virus could further spread among its overcrowded population.

The four infected with the virus are relatives of a woman who tested positive earlier this week and are isolating inside their home, according to a statement from the UN agency for Palestinian refugees. It said they were so far not in need of hospitalisation

The Palestinian woman who was taken to a hospital in Beirut this week became the first refugee living in a camp in Lebanon to contract the virus, a finding that triggered a spate of testing in the camp. The five confirmed cases are residents of the Wavel camp in the city of Baalbek, known locally as the Jalil, or Galilee camp.

Updated: April 25, 2020 04:03 PM

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