Mansouri is scheduled to assume the position of ruler temporarily after the deeply divided political factions failed to appoint a successor to Salameh, despite the fact that the country is going through the worst financial crisis in four years that plunged many Lebanese into poverty and caused depositors to freeze funds.
Salameh, 73, leaves the Banque du Liban after 30 years in office marred in recent years by a financial collapse that paralyzed the banking system, in addition to corruption charges against him at home and abroad, which he denies.
The failure to appoint a new governor is one of the broader deficits that left Lebanon without a government with full powers or a president, adding to the vacuum in a country that has been paralyzed by the financial collapse that has been going on for four years.
Mansouri described the state’s lending policy in the past as an unsustainable policy, in a press conference held at the headquarters of the Banque du Liban, in which he said that the new leadership of the central bank plans to impose strict restrictions on when the central bank can lend to the government, and that this funding should stop gradually.
He said that state lending should be conditional on repayment to the bank.
He said the authorities should also phase out a controversial trading platform known as Sarefa and lift the local currency peg.
“We are at a crossroads,” Mansouri said, adding, “I assure you… no government-funded disbursement will ever be signed outside my convictions and outside the appropriate legal framework for that.”
Mansouri added, “In fact, we are looking at a short transitional period that allows the state to be funded according to a law issued by the parliament and under its supervision, as part of an integrated basket that allows starting a real reform workshop through… approving reform laws.”
The crisis resulted in the emergence of a group of exchange rates for the lira, whose value has declined by about 98 percent since 2019. Mansouri said, “The unification and liberalization of the exchange rate will take place without the intervention of the Bank of Lebanon and the disbursement of additional funds.”
He also said that the authorities should phase out an exchange platform.
The final chance
The International Monetary Fund said in June that the crisis was exacerbated by the conflict of vested interests with important reforms.
Mansouri, 51, called on the government to implement reforms that constitute a capital control law, a financial restructuring law and the state budget for 2023 within six months, saying this is the “final chance” for Lebanon to enact changes and unfreeze deposits.
He said the only way to stop the state’s dependence on central bank financing is to improve public finances.
The appointment of Mansouri, who is Shiite, along with three other deputy governors, came in June 2020. The leadership of the central bank is chosen through a system of power-sharing between sects, which governs choices for other top positions in Lebanon.
The governor of the bank must be from the Maronite sect, while his deputies belong to the Shiite, Sunni, Druze, and Armenian sects, and the political leaders who represent each sect must agree to their selection.
Mansouri’s nomination in 2020 came from Parliament Speaker Nabih Berri, who leads the Shiite Amal movement. Al-Mansoori has a distant family relationship with Berri.
His biography, posted on the Central Bank’s website, indicates that he trained as a lawyer and worked as a legal advisor to the Ministry of Finance and Parliament in recent years.
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