Spotlight: Lebanese central bank employees' indefinite strike to impact banks, citizens: economists

Source: Xinhua| 2019-05-06 16:11:59|Editor: xuxin
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by Dana Halawi

BEIRUT, May 6 (Xinhua) -- Local economists believe that the indefinite strike announced by the central bank's employees in Lebanon last Saturday will have a big impact on people and commercial banks.

"The strike of the central bank will impact clearing of checks because all transactions made by commercial banks go through Banque Du Liban (BDL)," Nassib Ghobril, economist and head of the economic research department at Byblos Bank, told Xinhua.

Ghobril said that this will also impact foreign exchange operations in Lebanon. "If people want to exchange their Lebanese pounds into dollars, they won't be able to do it because this has to go through the central bank," he said.

Ghobril explained that imports and exports will also be affected because letters of credits and letters of guarantees also pass by BDL.

Likewise, economist at the Lebanese American University Layal Mansour told Xinhua that administrative work at the central bank will become slower.

Lebanon's central bank employees announced Saturday that they have extended their two-day strike indefinitely in protest against a possible cut in their wages by the government.

The announcement comes after rumors were spread in the past few days about the government's plan to remove the four additional salaries that employees at BDL are paid every year.

BDL's employees argued that the government does not have the right to cut their wages because the central bank's budget is independent and has nothing to do with that of the Finance Ministry.

Economists, however, denied the possibility of the Finance Ministry to assert control over the central bank.

Mansour said that the central bank is an independent entity and this is why Lebanon stayed two years without a president and one year without a government but the central bank has never stopped working.

Ghobril that the theory that the central bank should come under the authority of the Finance Ministry is very harmful and very bad for confidence and stability of the monetary policy.

Public sector employees have been waging demonstrations in the past few days to protest a possible cut in their wages aimed at reducing the state budget's deficit.

Endorsing a state budget that slashes the deficit is among the measures the government has pledged to take as part of the key financial and economic reforms recommended at last year's CEDRE Conference.

To curb Lebanon's budget deficit, which has increased to over 11 percent of GDP, the cabinet will seek to reduce the deficit by 1 percent each year over the next five years by limiting government expenditures.