BEIRUT: Riad Salameh, the governor of Lebanon’s central bank, said on Thursday that depositors could withdraw money from their dollar deposits in Lebanese pounds at a rate two and half times better than the official one.
The decision reverses an earlier stance and comes a day after panicked depositors lined up outside ATMs to withdraw as much as possible before a suspension of the preferential rate took effect.
The pound, pegged for 30 years at 1,515 to the dollar, is now trading at nearly 13,000 pounds to the dollar, according to the Associated Press.
Salameh reversed the decision less than 12 hours after banks started implementing the new circular issued by the state’s Shoura Council.
On Wednesday night, angry Lebanese took to the streets and destroyed ATMs across the country after they found themselves unable to make withdrawals.
Stopping this service affects major and minor depositors, who rely on monthly limited access to their dollar deposits to be able to carry on with everyday life or to retrieve locked funds, even if it means withdrawing their money in pounds and at a very low rate.
On Thursday morning, President Michel Aoun met with Salameh and the head of the Shoura Council, Judge Fadi Elias. Following the meeting, Salameh said: “The decision reflected our great respect for the Shoura Council and the Lebanese judiciary.
“Judge Elias explained to us that there is a possibility not to implement the decision immediately, and if we submitted a review, this would give us time before implementation,” he added.
Economist Jassem Ajjaka told Arab News: “What is happening reflects the chaos resulting from the absence of a government.”
He said the Shoura Council’s decision “did not take into consideration the interests of depositors,” and added: “This does not mean that depositors should accept taking their deposits at the fixed rate of 3,900 pounds. Banks must develop a roadmap to give people their deposits in dollars.”
Several economists and politicians feel the chaos caused by “hasty and ill-conceived” bank and judicial decisions has been exacerbated by an unprecedented escalation in the conflict between Aoun and the prime minister-designate, Saad Hariri.
Those who have been closely watching the conflict expect it to end with a rift between them, as all mediation efforts have failed so far. The war of words between Hariri’s Future Movement and Aoun’s Free Patriotic Movement (FPM) has escalated into what journalists and pundits dubbed a “cancelation war” as the two sides swapped accusations and personal insults over the past 72 hours.
Lebanon has been without an elected government for 300 days, since the resignation of Hassan Diab’s government, which has carried on in a caretaker capacity.
On Wednesday, Diab urged the Lebanese people to “remain patient in the face of the injustice they are facing,” and called on political parties to “make concessions to stop the country from continuing toward this frightening path.”
He appealed to Lebanon’s “brothers and friends” to rescue the country “before it is too late,” in the same week the World Bank said in a report that Lebanon was headed towards inevitable economic collapse.
The Maronite patriarchy reiterated on Thursday the need for a UN-sponsored international conference on Lebanon to implement the resolutions of the UN Security Council.
Patriarch Bechara Boutros Al-Rai announced on Wednesday from the presidential palace that the “insults are unacceptable” and suggested “the formation of a multipolar government, even if it means forming a government of politicians, similar to Fouad Chehab’s government (in the 1950s) only formed with four ministers, to rescue Lebanon from this hell.”
A statement recently issued by the palace also accused Hariri of usurping “the powers of the president” and “coming up with new rules for the Cabinet’s formation.”
The Future Movement, meanwhile, said the presidency was “now controlled by a bunch of advisers trying to undermine its status, and fill it up with propositions, ideas and statements that do not match its national role.”