Fears growing over who will pay for Lebanon’s bankruptcy

Agencies | Beirut

The Daily Tribune – www.newsofbahrain.com

Lebanon and its central bank are bankrupt, according to the country’s deputy prime minister. The “state is bankrupt … so is the Banque du Liban,” Saadeh Al Shami said yesterday, adding that “the loss has occurred, and we will seek to reduce the losses for the people.”

He said the losses would be attributed to the state, the central bank, and other lenders and depositors. “We cannot live in a state of denial as we cannot allow withdrawals for all people who have deposits in banks,” he said.

A delegation from the International Monetary Fund (IMF) is in talks with the Lebanese government on a financial recovery plan. Economic groups in Lebanon have objected to a plan presented to the IMF that clears the state of liability and leaves depositors and banks to foot the bill.

It also turns state debt into heavy losses for the Lebanese economy and society. After a meeting with the head of the IMF mission, Ernesto Ramirez-Rigo, the groups said that depositors’ money had been squandered due to the fixing of the exchange rate, interest rate differences, and the state’s expenditure.

They objected to “easy solutions, by adopting an accounting approach that eliminates losses without any special considerations.”

They also stressed the need to preserve the rights of depositors and the continuity of the banking system. Saroj Kumar Jha, director of the Middle East department at the World Bank, said yesterday that the “economic situation in Lebanon is dire.”