Lebanese Central Bank Governor Riad Salameh
Lebanese Central Bank Governor Riad Salameh speaks during a news conference at Central Bank in Beirut, Lebanon, November 11, 2019. Image Credit: Reuters

Beirut: Lebanon’s caretaker premier Najib Mikati will not extend the term of sitting central bank governor Riad Salameh when it ends later this month, the prime minister’s office said on Monday.

Salameh’s term expires on July 31, bringing an end to a 30-year tenure stained by recent charges at home and abroad of embezzlement of Lebanese public funds. He denies the charges.

In a statement sent to Reuters, Mikati’s office said his position was based on current legislation which stipulates that the first vice governor would assume the governor’s duties until a new one is appointed.

“The most important thing is that no vacuum occurs at the central bank because it’s the country’s financial backbone,” the statement said.

One of Lebanon’s four vice governors told Reuters they were considering quitting together if no successor is named, raising the possibility of a leaderless central bank amid a deep financial crisis.

Mikati’s deputy, Saade Chami, told Reuters last week that such a threat was “dangerous” and that the vice governors should “assume their responsibility in case this appointment is not possible.” Efforts to find a successor to Salameh have been hamstrung by Lebanon’s breakdown in governance and intensifying political tensions. Central bank governors are typically appointed by the president, but parliament has been unable to elect one to follow Michel Aoun, whose term ended in late October.

Parliament speaker Nabih Berri, a longtime backer of Salameh, told reporters on Monday that “necessity allows for that which is prohibited”, signalling that cabinet should appoint a governor even as it operates in a caretaker capacity.

But he said he would “respect what the prime minister announced regarding neither an appointment, nor an extension.” Many Lebanese blame Salameh for Lebanon’s financial collapse, alongside the long entrenched ruling elite. Salameh says he has been scapegoated for the meltdown, which followed decades of corruption and profligate spending by politicians.

Salameh has worked hand-in-glove with the elite for years.

In late 2021, Mikati signalled Salameh should remain in his post even as the graft investigations against him gained traction, saying “one does not change their officers during a war”.

More recently, however, Salameh has appeared to be increasingly isolated.