In an online interview, the governor of the central bank (Banque du Liban, also called BdL) declared that the financial losses represent loans given by BdL to the Lebanese government. He added that he could not refuse to lend to the government, given that the parliament voted for the loans. On another hand, some pundits suggested using the revenues from the potential gas discoveries off the shores of Lebanon to cover the financial losses; others suggested selling the central bank’s gold reserves.
In an online interview, the governor of the central bank (Banque du Liban, also called BdL) declared that the financial losses represent loans given by BdL to the Lebanese government. He added that he could not refuse to lend to the government, given that the parliament voted for the loans. On another hand, some pundits suggested using the revenues from the potential gas discoveries off the shores of Lebanon to cover the financial losses; others suggested selling the central bank’s gold reserves.
LIMS confirmed that the government bares a major responsibility in squandering the funds borrowed from BdL, but this does not free BdL from all responsibilities. When Lebanon was out of money and could not finance the government anymore, BdL resorted to unorthodox financial engineering operations (often referred to as a Ponzi scheme) to attract additional funds. LIMS added that the ongoing forensic audit at the central bank will not be sufficient to determine where the funds actually went, if the scope of the audit does not include the ministries that borrowed those funds.
Furthermore, LIMS argued that even if, hypothetically, Lebanon sold large quantities of gas or gold, the income from those operations would end up being wasted the same way the losses were. For instance, Lebanon maintains subsidies on select medical items and wheat. Those subsidies will ruin Lebanon the same way they destroyed countries rich in oil reserves, such as Venezuela. Subsidies do not reach the targeted population since subsidized medicine and bread are in shortage. In reality, those items are either smuggled or sold on the black market for higher prices. Therefore, Lebanon should immediately repeal remaining fuel, wheat and medicine subsidies.
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