Former Prime Minister Hassan Diab. (Credit: NNA)
BEIRUT — Lebanon's former Prime Minister Hassan Diab on Monday accused Banque du Liban Governor Riad Salameh of “trying to falsify the facts” in reference to the central bank chief's explanation that the financial crisis began in 2020 with the Lebanese government’s decision to default on its public debt.
In March 2020, then-Premier Diab announced that Beirut would not repay its Eurobond and would instead seek to restructure its massive debt.
Salameh on Friday said in an interview with Al-Sharq TV that “the inability of the Lebanese government to pay sovereign bonds is the main reason for the crisis, and the banking withdrawal crisis began with the state’s failure to pay.”
Diab responded to this claim on Monday, saying, “The governor of the BDL tries to falsify facts by saying that the financial crisis started in 2020 with the decision of the Lebanese government to stop paying more than $12 billion, the value of the public debt in which Lebanon was drowning.”
The former prime minister added that indicators of the crisis began to appear in 2011 and were exacerbated by BDL's decisions to support the Lebanese lira's pegged US dollar exchange rate and to finance the state and cover its deficit.
“The policy of borrowing [by] the state to finance its deficit has caused the accumulation of debts, that eventually became difficult to repay," Diab also explained.
The financial collapse became apparent in 2019, as the lira's parallel market exchange rate began to significantly deviate from its pegged rate. However, Diab also pointed out that even just weeks before the collapse, the governor of the central bank continued to tell the Lebanese that “the lira is fine.”
Diab went on to accuse Salameh of “trying to obtain an acquittal of responsibility for the collapse” and to appear innocent.
Salameh was once considered a financial genius and received much praise as BDL governor, but since 2019 much of the Lebanese population has come to accuse him of being among those responsible for Lebanon’s unprecedented economic crisis.
In August 2022, the World Bank said in a report that Lebanon's depression was "deliberate in the making over the past 30 years" and accused Lebanese officials of having resorted to "excessive debt accumulation to give the illusion of stability and reinforce confidence in the macro-financial system for deposits to continue to flow in."