2025-04-04T10:18:05.000Z

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BEIRUT (AP) — In a significant development for Lebanon's struggling economy, the newly appointed central bank governor, Karim Souaid, pledged on Friday to tackle pressing issues such as money laundering and the financing of terrorism, emphasizing the importance of maintaining independence from political intervention. This commitment comes at a crucial time for Lebanon, which has experienced severe economic turmoil since 2019, leading to widespread hardship among its citizens.

Souaid made his remarks shortly after officially assuming office in Beirut, where he outlined a comprehensive approach aimed at restructuring the banking sector, managing public debt, and ensuring the return of funds to depositors who have suffered losses in recent years. The current economic landscape in Lebanon has been described as the worst crisis in its modern history, requiring urgent reforms to satisfy the international community's demands for assistance.

Among the challenges ahead, Souaid highlighted the need for Lebanon to implement critical reforms that are essential to unlocking international aid. The situation has been exacerbated by the ongoing conflict with Israel and Hezbollah, which has inflicted an estimated $11 billion in damages and economic losses, according to the World Bank. The conflict, coupled with the economic fallout from the COVID-19 pandemic and the catastrophic Beirut port explosion in August 2020, has left many Lebanese citizens struggling to make ends meet.

The roots of Lebanon's crisis can be traced back through decades of corruption perpetrated by the nation’s political and financial leaders, which systematically drained state resources. This corruption ultimately led to a bank run in 2019, causing citizens to lose access to their savings. As the crisis deepened, Lebanon transitioned to a cash-based economy, a move that has only added to the challenges facing everyday life for its people.

In a recent report, the Financial Action Task Force (FATF), an international watchdog on anti-money laundering efforts, placed Lebanon on its “grey list” in October, underscoring the urgent need for reform. “We will work on implementing international laws, particularly in combating money laundering and supporting terrorism,” Souaid stated, demonstrating his commitment to aligning Lebanon's financial systems with global standards.

Addressing the banking sector, Souaid advocated for a recapitalization of banks, encouraging them to inject new capital to stabilize their operations. He suggested that those institutions unwilling or unable to recapitalize should consider merging with other lenders. Moreover, he prioritized the return of deposits, indicating that those with small accounts would be the first to receive their funds back. He stressed that the responsibility for returning deposits lies with the banks, the central bank, and the state.

Looking ahead, Souaid emphasized the central bank’s intention to carefully examine all economic recovery proposals put forth by previous governments. These plans are critical for paving the way forward for Lebanon’s recovery.

In a transition of leadership, Souaid takes over from Riad Salameh, who served as governor for three decades. Salameh left office amidst a backdrop of international corruption allegations, including embezzlement and other financial crimes. He had been appointed governor in 1993, a time when Lebanon was working to rebuild after a devastating 15-year civil war.