Lebanon’s foreign exchange reserves down $2 billion: central bank

Lebanon’s central bank governor Riad Salameh said the country’s foreign exchange reserves fell by $2.2 billion in 2022. As his comments aired on television, police raided his home in as part of an investigation into allegations of corruption.

Riad Salameh is under investigation for financial misconduct and corruption [Getty]

Lebanon’s central bank governor Riad Salameh said on Tuesday that the bank’s foreign exchange reserves had fallen by $2.2 billion so far in 2022 to about $11 billion, about a third of the level of three years ago.

Salameh made the comments during a recorded interview with Lebanese television LBCI. While the interview was airing, state security forces were raiding a home he owns northeast of Beirut as part of a judge’s investigation into allegations of misconduct and of corruption.

Once celebrated as a financial magician, Salameh has been on the defensive since 2019, when Lebanon sank into an economic meltdown that saw the currency lose more than 90% of its value.

Lebanon had more than $30 billion in foreign currency reserves when this crisis began, but Salameh said the amount is now a third of that.

“Central Bank (reserves) have declined by a net amount of $2.2 billion since the end of the year,” he said on Tuesday.

“We will have over 11 billion that we can use.”

He said the central bank would propose a law to a newly formed cabinet to issue banknotes in larger denominations to make the pound easier to use in view of the devaluation.

Lebanon is due to appoint a new prime minister on Thursday, who would then be tasked with forming a new government. The process is often long and can take months of haggling before a consensus is reached.

Salameh also said in the interview that he was in favor of maintaining bank secrecy in Lebanon, where banks have severely restricted access to hard currency for most depositors.

The statement contradicts the position of Lebanese Deputy Prime Minister Saade Chami, who told Reuters he “sees no advantage in maintaining” banking secrecy in the country.

The International Monetary Fund had also established a “reformed banking secrecy law to bring it in line with international standards” as a precondition for accessing relief funds for Lebanon.

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