Lebanese Deputy Prime Minister Saade Chami. (Credit: Embassy of Canada / Twitter)
BEIRUT — Lebanese Deputy Prime Minister Saade Chami said that “Lebanon’s government and its central bank are bankrupt,” during an interview broadcast Sunday on Al Jadeed TV. The central bank denied this claim Monday, and said it is continuing to play the role entrusted to it by Article 70 of the Code of Money and Credit as they relate to safeguarding the national currency and economic stability.
Here’s what we know:
• Lebanon has technically been in default since the moment Prime Minister Hassan Diab’s government decided to default on its debt for the first time ever in March 2020. However, this is the first time a high-ranking official in the government of Prime Minister Najib Mikati has made such outright statements.
• Chami is also the head of the team negotiating with the International Monetary Fund, and is himself a veteran of the fund. His involvement in the ongoing negotiations with the IMF, and the access he is afforded to financial reports, lends more credence to comments about financial matters.
• Chami has repeatedly described the current economic and financial conditions in Lebanon as dire. In his latest address to the Economic Council, the deputy prime minister marked up the financial sector losses from $69 billion to $73 billion, while arguing that the state cannot bear the bulk of the losses for debt sustainability reasons.
• The central bank released a statement on Monday afternoon denying what is being circulated about its bankruptcy, and it said that despite the size of the losses in the financial sector, the central bank continues to act in the markets as prescribed by law.
• Mikati, who met with Progressive Socialist Party leader and MP Walid Joumblatt, was asked about Chami’s comments, to which he replied that the words were taken out of context, and Chami was talking about liquidity shortages at the level of the government and the central bank, and not their solvency.
• Chami explained later in an interview with local television station OTV that his words were taken out of context, and he meant the government has no liquidity to deal with the existing problems facing the country. “No official can declare the bankruptcy of the government,” he added.