BEIRUT: Lebanon’s central bank aims to keep the exchange rate of its pound currency stable in 2019, the bank’s governor said on Wednesday.
Riad Salameh also said Lebanese bank deposits climbed by 3.5 per cent in 2018.
The comments were his first in public since remarks by the finance minister last week about Lebanon’s public debt triggered concerns that the debt might be restructured, leading to a sell-off in the country’s dollar-denominated sovereign bonds.
The government issued a statement on Sunday saying it had “absolutely” no plans to restructure the debt, helping the bonds to recover.
The pound has been pegged against the dollar at its current level for more than two decades.
“For 2019, our goals will always be for the stability of the Lebanese pound exchange rate,” Salameh said. “Our view of interest rates is stable.” He said the notable thing about the increase in deposits “was in the deposits in foreign currencies while the deposits in Lebanese pounds remained at the same level, raising dollarisation to 70 per cent in the Lebanese markets.” The veteran central bank governor did not refer to last week’s market turbulence in his comments to the Arab economic gathering in Beirut.
Lebanon’s public debt is one of the biggest in the world compared to GDP at around 150 per cent.
Salameh said Lebanon’s economic growth in 2018 was around 1 per cent to 1.5 per cent according to central bank studies and compared this to growth of around 2 per cent in the region.
“We could have done 2 per cent if the government had been formed at the appropriate time,” he said. Political deadlock is still blocking the formation of a new cabinet more than eight months after a national election.
Salameh said recent instructions to money transfer firms to pay in Lebanese pounds were related to compliance to combat money laundering “and not as some tried to frame it as either to prevent transfers or to support the Lebanese pound”.