Listen to the article

Wassim Mansouri, first vice-governor at the Banque du Liban, takes over as head of the country’s highest monetary authority, effective Tuesday August 1, 2023. The handover took place smoothly, in accordance with Article 25 of the Code of Money and Credit, which sets out the procedures for succession in the event of a vacancy in the post of governor.

The first vice-governor of the Banque du Liban, Wassim Mansouri, announced that he will take over as head of the country’s highest monetary authority from August 1, 2023, at a press conference held at the Banque du Liban (BDL) headquarters in Hamra, accompanied by the second, third and fourth vice-governors, Bachir Yakzan, Salim Chahine and Alexandre Mouradian.

Mansouri, who spoke for a rather short time (19 minutes), quickly left the room at the end of his written speech, preventing the media representatives, who were present in large numbers, from asking questions. Curiously, Wassim Mansouri never mentioned the name of his predecessor, Riad Salameh.

From the start of his speech, he set the tone, explaining what his mandate would be, and that of the three other vice-governors, whose terms of office expire on June 10, 2024.

In no uncertain terms, he laid the blame for the erosion of the BDL’s reserves, both directly and indirectly, at the door of successive governments and “those who held executive power at the central bank,” while admitting – to put it mildly – that he was part of the entity that held “decision-making power” at the central bank.

The solution does not lie with the BDL 

Wassim Mansouri clearly took the opposite view of Riad Salameh’s monetary policy, believing that “all the expectations of government financing requests were unjustified.” On the other hand, he insisted that “the solution to the crisis is not to be found at the BDL, and that it is not monetary,” adding that “it is not up to the central bank to determine the country’s economic policy.”

Despite this, the new head of the central bank stressed that “the solution to the crisis lies in improving public finances,” in the sense of improving the collection of state revenues, revealing that public administration revenues currently stand at LBP 20 trillion per month. “A collection capacity that could be improved if public administration is revitalized, which could lead, in time, to an acceptable financial equilibrium,” he noted.

No more state funding

His first wish: to stop government funding. However, this policy can only be implemented “gradually.” It will be linked to four conditions that are not self-evident, and will require close collaboration between BDL, the government and Parliament.

“I will not sign any financing authorizations unless I am convinced of this and only if it has a legal backing,” he said.

In his opinion, state financing should be for “a short transitional period, based on a law, which would at the same time guarantee the “not just theoretical” capacity to return funds lent to the Banque du Liban.”

He considered that the government will have to determine the amount and duration of the state loan.

This financing for a transitional period is linked to reform conditions, which would be met within the next six months. These will be the approval of the 2023 and 2024 budget laws within the constitutional deadlines; the capital control law; the bank restructuring law; and finally, the financial recovery law. “There will be no way out of the crisis if these laws are not passed,” he said, while pointing out that they should have been approved four years ago. Additionally, Wassim Mansouri called on decision-makers “to keep monetary policy free from political tug-of-war.”

An unclear transition

The transitional governor of the BDL felt that “the six-month deadline for implementing the recommended laws is not a short deadline, especially as Lebanon is going through one of the worst financial crises in its history.”

Regarding the salaries of civil servants (332,000 in number), whom he described as one of society’s vulnerable groups because their emoluments are denominated in Lebanese pounds, Mansouri indicated that they would be paid “on the basis of a fixed Sayrafa platform rate.”

As for the duration of this measure, it will depend on the duration set by the government in the bill on the basis of which the loan to the State will be granted by BDL.

In conclusion, Mansouri reminded his audience for the umpteenth time, as if trying to lighten his responsibilities, that the way out of the crisis cannot come from the Banque du Liban alone. A truism for the self-righteous and a joke for political decision-makers. To be continued.