Crisis boosted confidence in Lebanese economy

Lebanon’s ability to survive the crisis sparked last month by the premier’s now rescinded resignation has increased confidence in its economy, the governor of the country’s central bank said Friday.

Lebanon, chronically feared to be on the brink of default, was shaken last month by an unprecedented crisis that saw Prime Minister Saad Hariri resign from Saudi Arabia in mysterious circumstances before a Western diplomatic effort and subsequent national consultations saved his job.

“The liquidity to fund the economy remained available because we maintained monetary stability during this crisis and even I think that after this crisis there will be more confidence,” Riad Salameh said. A month after his shock resignation from Riyadh, which has been the main backer of his political camp, Hariri announced last week that he was staying following a rare display of political unity in his support.

“The cost for the country has been that the interest rates on the Lebanese pound have risen,” said the influential governor of the Banque du Liban, who has been in his job since 1993. “So depositors that were getting between 6 and 7 percent on their deposits on a monthly basis are now getting between 8 and 9 percent,” Salameh said.

He stressed however that the fact that Lebanon’s economy, whose state was described as critical by some observers, weathered the storm vindicated the central bank’s policies and opened the door for investment. “So the cost is the higher interest rates but the reward is that the country has shown again a resilience and that our monetary policies are correct,” Salameh said.

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