Lebanon’s new apex bank exec hints at reforms

The Lebanese central bank is undergoing a crucial leadership transition as Wassim Mansouri, the interim chief, calls on the government to initiate long-overdue reforms amidst a challenging financial crisis. Following the end of Riad Salameh’s 30-year tenure as the central bank’s chief, Mansouri is set to take over the position, assuming the role of acting head.

Lebanon has been grappling with a severe financial crisis for the past four years, and the failure of political factions to appoint a successor to Salameh has added to the country’s instability. During his time in office, Salameh faced accusations of corruption, both domestically and internationally, which he firmly denies. The economic meltdown under his watch left many Lebanese in poverty and paralyzed the once flourishing banking system.

Speaking at a news conference, Wassim Mansouri expressed his intention to implement strict limitations on the central bank’s lending to the government, gradually phasing out such funding entirely. He also emphasized the need to discontinue the controversial exchange platform, Sayrafa, and abandon the peg on the local currency. Mansouri asserted that any government financing he approves would strictly adhere to the legal framework, signaling a commitment to transparency and accountability.

Mansouri’s appointment comes at a critical juncture for Lebanon, where the lack of a fully empowered government and president has exacerbated the country’s financial collapse. Widespread dysfunction, coupled with decades of profligate spending and corruption overseen by dominant sectarian factions, has contributed to the dire situation. The International Monetary Fund pointed out in June that vested interests resisting essential reforms have aggravated the crisis.

A trained lawyer who served as a legal consultant to the finance ministry and parliament, Mansouri sees this as Lebanon’s “last chance” to enact necessary changes. His reform agenda includes the implementation of a capital control law, a financial restructuring law, and the formulation of a 2023 state budget within six months.

In Lebanon, the central bank leadership is determined through a sectarian power-sharing system, and Mansouri’s appointment as a Shia Muslim to the traditionally Maronite Christian-held position reflects this arrangement.

Meanwhile, Riad Salameh’s departure was marked by a gathering of his followers celebrating his legacy. Despite being considered a financial expert, Salameh’s reputation faltered as the crisis deepened, and the populace faced financial hardships, unable to access their bank deposits. Moreover, his image was further sullied as European countries initiated investigations into potential abuse of power and embezzlement of Lebanese public funds. Interpol Red Notices were issued for his arrest by both French and German authorities.

Salameh has staunchly defended his actions, asserting that he had adhered to the law and respected the legal rights of others during his tenure. While the departing chief may have left the central bank, the challenges facing Lebanon’s financial system remain daunting as Wassim Mansouri takes the reins with a mandate to steer the country towards much-needed reforms.