Lebanon finds itself at a critical crossroads as it bids farewell to Riad Salameh, the central bank governor who recently ended his three-decade tenure. The departure of Salameh comes at a time when the nation is grappling with a myriad of challenges, from an economic crisis of unprecedented proportions to political gridlock and public discontent.
Salameh, once hailed as a financial wizard responsible for turning Beirut into a regional financial hub and steering Lebanon through global economic uncertainties, now departs amidst controversy and legal investigations. His legacy is marred by accusations of corruption, money laundering, and embezzlement of public funds. As Lebanon’s economy teeters on the brink, his departure marks a turning point that prompts the nation to reflect on the implications of his long-standing role.
For decades, Salameh played a pivotal role in the Lebanese financial system. He helped stabilize Lebanon’s national currency after the war and contributed to maintaining economic stability. However, the economic crisis that struck in 2019 exposed the fragility of Lebanon’s financial foundations. As the financial system crumbled, so did Salameh’s reputation, and he became a target of investigations both at home and abroad.
The economic crisis in Lebanon is considered one of the worst in modern history, pushing the nation to the verge of collapse. Decades of corruption and mismanagement, including Salameh’s leadership of the central bank, exacerbated the situation, plunging the country deeper into financial turmoil.
Economists hold diverse views regarding Salameh’s role in the crisis. Some credit him for safeguarding Lebanon’s currency and maintaining economic stability after the war. Others, however, accuse him of running what’s dubbed a ‘Ponzi scheme,’ where he allegedly siphoned off dollars from local banks at high-interest rates. Lack of transparency in financial operations further eroded public trust and worsened the crisis. Now, Lebanon faces the daunting task of stabilizing its crumbling financial sector.
As the chapter under Salameh’s leadership closes, Wassim Mansouri, the first deputy governor of Banque du Liban (BdL), Lebanon’s central bank, takes the reins as the acting governor. The nation’s focus shifts to the challenging road ahead. Experts emphasize the urgent need for transparency, disclosure, and essential steps to be taken, such as banking sector restructuring, unifying the exchange rate, and transitioning to flexible exchange rates.
One significant step in the reform process is abolishing the controversial exchange platform known as Sayrafa, which was introduced in 2021. This platform aimed to stabilize the Lebanese pound but faced criticism for its lack of transparency and sustainability. Lebanon also grapples with diminishing international reserves, dropping from pre-crisis levels of around $28 billion to below $9 billion.
Salameh’s departure offers both hope and uncertainty for Lebanon’s future. The nation stands at a crossroads, facing potential paths that could lead to vastly different outcomes. One scenario mirrors Venezuela’s challenges, with a government in turmoil, devaluation of the exchange rate, and escalating poverty. The other scenario necessitates comprehensive political reforms, including new leadership and structural changes.
As Lebanon strives for a transformative future, the need to address systemic issues becomes paramount. The ruling class must acknowledge that those who contributed to the problems cannot be solely relied upon to provide solutions. A renewed focus on transparency, good governance, and economic revival is essential to lead Lebanon out of its current crisis and towards a path of sustainable growth.