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Lebanon Central Bank Official Charged in Currency Probe

Lebanon Central Bank Official Charged in Currency Probe

Monday, 18 May, 2020 - 18:45
A man flashes the victory sign during a protest at al-Nour Square in Tripoli, Lebanon. (EPA)
Asharq Al-Awsat

A Lebanese prosecutor on Monday charged a top central bank official with manipulating the exchange rate, a judicial source said, as the country struggles with a major currency crisis.

The director of monetary operations at the central bank, Mazen Hamdane, was arrested on Thursday, as part of a currency crisis probe that has seen dozens of money changers detained in recent weeks.

The Lebanese pound had been pegged to the dollar at 1,507 since 1997 but the country's worst economic crisis in decades has seen its value plunge by more than half on the black market.

The central bank has sought to stem the fall by ordering exchange offices to cap the rate at 3,200 to the dollar, but the pound has continued to tumble.

Financial prosecutor Ali Ibrahim "charged Hamdane with manipulating the national currency and breaching the pound's stability through directly buying dollars from money changers", a judicial source told AFP.

The prosecutor has referred his case to an investigative judge, the source said.

These are "the first charges against a central bank official", it said.

On Friday, the central bank issued a statement denying it was behind "any manipulation in the money changing market".

Lebanon is in the midst of its worst economic crunch since the 1975-1990 civil war.

As part of a severe liquidity crisis, banks have since last autumn imposed crippling capital controls, limiting then stopping dollar withdrawals and halting transfers abroad.

Security forces have detained around 50 money changers accused of selling dollars at too high a rate in recent days, though some have been released.

The head of the money changer syndicate has also been arrested.

In late April, Lebanon's government approved a rescue plan aimed at redressing the country's crumbling economy.

The government hopes it can get a $10 billion aid deal from the remote negotiations with the International Monetary Fund, which began last week and resumed on Monday afternoon.

France urges progress with IMF

France’s ambassador urged Lebanon to make rapid progress in talks with the IMF, local media said on Monday.

“The priority is progressing in negotiations with the Fund quickly,” local broadcaster LBCI quoted French Ambassador Bruno Foucher as saying on Monday. “The coming weeks will be important to continue discussions of the plan and financial matters.”

The comments came during a meeting between Diab and ambassadors of several countries that had pledged about $11 billion at a Paris conference in 2018.

Beirut hopes that with an IMF program in hand, foreign donors will unlock the money, which was conditional on long-stalled reforms and which never came.

Foucher was quoted as saying the meeting was “a chance to convince participants”.

Donors that helped Lebanon in the past say they will not give any fresh aid before the state makes changes to tackle corruption and waste - root causes of Lebanon’s economic problems.

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