BEIRUT, Lebanon (AL-Jazeera) – United Nations Special Rapporteur on extreme poverty and human rights Olivier De Schutter has blasted Lebanese Central Bank Governor Riad Salameh for not recognizing the bank’s role in the country’s crippling economic crisis.
“The role of commercial banks and the Central Bank [BDL] has been very problematic,” De Schutter said.
For years, the central bank bolstered its foreign currency reserves – and enabled the government to spend beyond its means- by paying out exorbitant interest rates to entice commercial banks to lend it U.S. dollars. In order to stay flush with dollars, commercial banks would in turn offer their depositors ever-higher interest rates.
Many have likened the practice to a Ponzi scheme.
For his part, De Schutter said it was unsustainable and the central bank should have known that.
“The Central Bank should have entirely been much more alert to this, and it should have warned the government about this unsustainable scheme. The BDL has a responsibility to what has happened,” he said.
On Friday, De Schutter wrapped up a 12-day mission to Lebanon in which he met with officials, residents, and experts to assess the country’s poverty situation and the government’s response to alleviating it.