Report: Balanced Govt. Required to Stop Economic Collapse
Deposits in foreign currencies, especially in US dollar are reportedly “safe” in Lebanese banks but the formation of a government is necessary to stop Lebanon’s economic “collapse,” the Kuwaiti al-Anbaa daily reported on Thursday.
A senior banking source who spoke on condition of anonymity told the daily that “deposits in Lebanese banks were safe,” but he warned that “withdrawals in dollars could be restricted if a balanced government is not formed in December.”
Faced with a grinding US dollar liquidity crisis, Lebanon's banks have since September imposed increasingly tight restrictions on dollar withdrawals and transfers abroad in an attempt to conserve dwindling foreign currency reserves.
This has fuelled tensions in the debt-ridden country, where a close to three-month-old protest movement is demanding the removal of political leaders deemed incompetent and corrupt.
The source said the price of one US dollar to the Lebanese pound could witness a dramatic increase, “around 3000 LL to the dollar, if the formation of a new government is not facilitated.”
He commented on the large “suspicious” transfers of money abroad, which if confirmed, would mark a violation of banking restrictions curtailing such transactions, and the role of the Central Bank in that regard.
He said: “The Finance and Budget parliamentary committee led by Strong Lebanon bloc MP Ibrahim Kanaan has the answer and knows the owners of these funds. When the list of names gets delivered to the central bank, then the implementation becomes the responsibility of the bank. Stop fooling us by silly excuses.”
Activists say ordinary depositors are footing the bill for a liquidity crisis worsened by politicians, senior civil servants and bank owners who used their influence to get their hefty savings out of the country.
Many of the country's top leaders own, or have large shares in, several banks.
Source: Naharnet
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