| Returning deposits is a process
| BDL has established monetary stability at no cost
| It will never lend the State again
In a talk organized by LeadersClub – by Lebanon Opportunities, Acting Governor of the Central Bank (BDL) Wassim Manssouri laid out the strategy and outlook of the monetary policy around four basic pillars. Intent on being differentiated from the bank’s former direction, he announced reforms inside the institution and major policy changes especially regarding the classification of bank deposits, the exchange rate, and BDL’s relationship with the Treasury.
No more lending to the State
The first decision I took after I was appointed in my new job in August 2023 was to stop lending to the State both in lira and foreign currencies. BDL is committed to this new policy and will never use its foreign currency (FX) reserves to lend to the State and will not subscribe to Treasury bills in lira. For this reason, the government must set balanced budgets. The existing budget, whose revenues are just $3.2 billion compared to $17 billion before the crisis, is not suitable and beneficial in light of the current recession. There is a need to grow the economy again after GDP has contracted from $55 billion to about $20 billion. The government could increase the budget to expand the economy by following the constitutional path. Otherwise, we will not allow spending beyond the amount stated in the existing budget. Even expenditure from the State’s own funds will not be allowed if it exceeds the budget unless the government provides legal justification. The government can increase allocations for spending through Parliament legislation.
Avoiding the risk of apparent collusion
The Central Bank will not write off the financial obligations of the State towards
