Barbed wire blocks the area around Banque du Liban. (Credit: Joseph Eid/AFP)
BEIRUT — Swiss daily Le Temps reported that Banque du Liban (BDL) removed startling information on the precarious status of Lebanon’s banking sector from a 2017 IMF assessment of the stability of the country’s financial system, and blamed the IMF for not sounding the alarm.
Here’s what we know:
• The Swiss daily argued that IMF experts “knew the country was heading for ruin,” but did not sound the alarm and instead presented a “garbled picture” of Lebanon in its report.
• BDL Gov. Riad Salameh “managed to remove 14 pages” from the IMF’s “Financial System Stability Assessment,” published in January 2017, according to Le Temps.
• The Swiss daily says it obtained a copy of the excised pages, which include an IMF verdict that most Lebanese banks would “not have the necessary liquidity in the event of a crisis,” foreshadowing the banking collapse that started in 2019.
• The excised portion of the IMF report also estimated that Banque du Liban was running at a net deficit of $4.7 billion, or approximately 10 percent of Lebanon’s GDP at the time, a figure that the central bank does not disclose publicly.
• “You are on the verge of the abyss,” one of the IMF report’s authors told Salameh in an April 2016 meeting, according to Le Temps, before the sensitive section of the report was removed.
• Le Temps said that while IMF regulation required its financial system assessment reports to be verified by local countries, the international organization’s hands were not completely tied and had the choice to accept or reject any modifications requested.
• BDL told the Swiss newspaper that IMF reports on Lebanon are discussed with the government, and not just the central bank and its governor. The IMF, for its part, declined to comment on the excised report, insisting that it “underlined the major vulnerabilities that threatened the Lebanese financial system at the time.”