Lebanon’s cabinet was unable to reach a consensus on a successor to outgoing Central Bank Governor Riad Salameh on Thursday. This could result in the bank being without leadership from next Monday. This comes as the country enters the fifth year of financial turmoil, and Salameh faces charges of embezzling public funds.
Amid a crumbling economy and facing corruption allegations, Salameh’s 30-year tenure as Central Bank Governor is set to conclude next Monday.
The Council of Ministers’ failure to gather the necessary number of ministers to appoint a new governor for the Banque du Liban (BDL) has raised concerns within the country. These worries stem from the potential consequences that may arise as Salameh’s tenure draws to a close.
Read more: Assets of Riad Salameh, Lebanon’s cental bank governor, seized
The primary concerns are the potential extension of the vacancy in Lebanon’s monetary authority leadership. This has already been vacant at the presidential level for almost nine months due to the absence of a consensus President of the Republic.
This could lead to executive and legislative paralysis, effectively reducing the government’s abilities to limited powers. Additionally, the parliament may be reduced to a mere elective body of the President of the Republic, without the ability to enact legislation.
24 ministers
As per the Lebanese Constitution, the presence of two-thirds of the Council of Ministers (24 ministers) is necessary to establish a quorum for government sessions.
This requirement is especially crucial as the Governor of the Bank of Lebanon is classified as a “first category” role. This necessitates approval from two-thirds of the Cabinet for appointment.
Thursday’s Council of Ministers’ session was canceled minutes after its scheduled start time. This was due to a shortage of ministers required to establish a legal quorum.
Prime Minister Najib Mikati stated, “Today we missed an opportunity to temporarily address a file related to the financial and monetary situation.”
However, he reassured that he will persist in fulfilling his constitutional and national duties with unwavering dedication. This is to ensure the proper functioning of public institutions, including the Bank of Lebanon.
Crucial role
Lebanon’s central bank has played a significant role in managing monetary realities, intervening in the market, and developing banking policies, among other tasks. This is amidst the ongoing financial collapse since 2019.
However, a governance vacuum in the central bank could significantly hinder its ability to perform these functions. This could pose a severe threat of a broader financial collapse in the country.
Necessary reforms
Lebanese leaders have failed to implement the necessary reforms to meet the expectations of international lenders. These lenders have made the release of billions of dollars conditional on these changes.
The International Monetary Fund (IMF) issued a warning last month, cautioning that Lebanon’s failure to enact these reforms could have dire and lasting consequences, posing a significant threat to the country’s economic and social stability.
For more news on Lebanon, click here.
