Salim Sfeir's comments, published in a newspaper on Tuesday,
underline stiff opposition within the banking sector to the
draft plan that surfaced earlier this month for steering Lebanon
out of its financial and economic crisis.
One of the world's most heavily indebted states, Lebanon last
month declared it could not pay its foreign currency debt.
The draft plan to solve the crisis calls for a restructuring of
commercial banks, projecting $83 billion of losses in the
banking sector, and calls for "a transitory exceptional
contribution from large depositors", among other politically
difficult steps.
"Placing the vast majority of the burden and cost on the banking
sector raises questions about the government’s commitment to
long-awaited public sector reforms, especially when it’s no
secret that the root of all problems is corruption and bad
governance," Sfeir wrote in the Daily Star.
Lebanon's currency has lost half its value since October as the
financial crisis escalated and savers have been denied access to
their hard currency savings.
The planned restructuring of commercial bank balance sheets
includes a full bail-in of existing shareholders estimated at
$20.8 billion in capital write-offs, with the remaining $62.4
billion covered by the exceptional contribution from large
depositors.
Sfeir directed blame at successive governments which he said had
squandered state resources and borrowed from the central bank,
which was obligated to finance the state.
"By resorting to such borrowing, the government in effect
confiscated depositors’ money in banks, and consequently created
the current liquidity crisis.
"Instead of calling for restructuring of the banking sector, the
government should focus on reforming the public sector and the
balancing its budget," he said. "Selling or mortgaging state
assets are strategies that other governments around the world
adopted in order to restore financial balance."
Prime Minister Hassan Diab, who was appointed with backing from
the powerful Shi'ite group Hezbollah and the Christian Free
Patriotic Movement founded by President Michel Aoun, said last
week that 98% of depositors will be left unscathed by the plan.
Former prime minister Saad al-Hariri and Druze politician Walid
Jumblatt have also criticised the plan, saying it aims to
confiscate depositors' money.
Sfeir said that by hinting he could not guarantee the safety of
the deposits of 2% of depositors, Diab was sending the wrong
message to investors.
After the draft was leaked to media, the finance minister said
it had yet to get to the restructuring of the banking sector and
the government was still studying options in that regard.
(Reporting by Tom Perry; Editing by Susan Fenton)
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