Scare dollar: Acting BDL Governor Mansouri worries as political crisis deepens

Scare dollar: Acting BDL Governor Mansouri worries as political crisis deepens

| Tuesday 19 September 2023

Source: Nidaa al-Watan/LBCI

Sources within the Banque du Liban (BDL) have indicated that acting governor Wassim Mansouri is "increasingly concerned about the political stalemate," particularly regarding the presidential election impasse.

The sources stated that Mansouri and the other governor deputies had hoped for a presidential breakthrough to form a government and appoint a new governor responsible for implementing a new monetary policy before the end of the year.

However, it appears that this will be difficult to achieve in the upcoming months, which puts Mansouri under tremendous pressure if he insists on not financing the state in dollars and if he is forced to launch the 'Bloomberg' platform quickly so that the dollar can move upwards.

They further elaborated to "Nidaa Al-Watan" that special withdrawal rights are close to exhaustion, raising the issue of securing dollars to support the purchase of medicines. Mansouri was able to collect $80 million from the market to pay employees' salaries during the days when tourists were in the country.

Now that most have returned to their home countries, dollars have become relatively scarce. Any additional large request will push the dollar to rise again.

What is more concerning is that the academic year requires $150 million, and next year will witness dues of hundreds of millions of dollars to repay external debts, in addition to other needs for security institutions, electricity, telecommunications, and outer wire.

In 2024, the need for more than $1.5 billion is expected, and it is not yet known how these amounts will be secured unless Mansouri reverses his position and is forced to disburse from the mandatory employment in the BDL, putting himself in confrontation with depositors and breaking his previous promises."

A source familiar with the mechanism followed by the BDL to collect dollars in a way that keeps it in control of the market price currently explained, "In the weeks before the end of the term of the former governor Riad Salameh, the size of the cash mass in Lebanese lira exceeded LBP 100 trillion. Therefore, withdrawals from mandatory reserves amounted to about $700 million to collect liras from the market, causing the cash mass to drop to LBP 60 trillion."

They added, "If salaries are paid in Lebanese lira, the size of the cash mass will increase, and pressure on the dollar will return, causing its price to rise. This could happen in the next two months."

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