Marwan Kheireddine says he’s not happy to have learned about a letter created on behalf of the Association of Banks in Lebanon on social media.
“It’s ridiculous that this happens behind closed doors,” Kheireddine told Reuters.
Marwan Kheireddine is referring to the staff-level agreement between the International Monetary Fund and Lebanon, which pledged $3 billion in financing over four years to help lebanon during its current economic crisis. The letter is essentially demanding banks take the hit for financial sector losses, according to wtvbam.com.
The IMF stated in a press release, “Lebanon is facing an unprecedented crisis, which has led to a dramatic economic contraction and a large increase in poverty, unemployment, and emigration.” The IMF also cites inflation, the COVID-19 pandemic, the August 2020 Port of Beirut explosion, and the Ukraine-Russia war as fueling Lebanon’s current economic debacle.
Marwan Kheireddine is the chairman of AM Bank, which is one of the Lebanese banks deeming the IMF agreement as “unconstitutional.” In a June press release, AM Bank declared its suspension of its Association of Banks in Lebanon membership.
“AM Bank is of the opinion that the Association of Banks in Lebanon had an opportunity to prevent the exacerbation of the current crisis, yet it did not undertake efforts to improve its performance or make the right decisions in order to put in place plans and solutions aimed at recovering the depositors’ money,” the release stated.
Marwan Kheireddine says the Lebanese government is part of the problem.
“The government of Lebanon actually owes the Lebanese, globally, a total of around a hundred billion,” he says. “I’m asking that the government of Lebanon assume its fiduciary responsibility toward its financial system, its depositors, and Lebanese citizens and come up with a plan to repay the debt.”
Marwan Kheireddine Says Banking Sector Must Be Involved in Decisions
After acknowledging to Forbes Middle East that the IMF agreement will affect the lives of Lebanon’s citizens for possibly two decades, Kheireddine says the opinion of banks should not be omitted from the process.
AM Bank’s press release also stated that they suspended their ABL membership with the hope of “sending a clear message to the ABL leadership that ‘enough is enough,’ and matters must be dealt with a higher level of understanding and realism.”
Lebanon’s economy has been in a tailspin, according to Marwan Kheireddine.
The World Food Programme reports that about 22% of Lebanese households are food insecure, according to thenationalnews.com. The news outlet also ran an editorial from a Lebanese expatriate who stuffed her luggage with bread, flour, over-the-counter medicines, and first-aid kits for a recent trip to Lebanon. AM Bank’s release also referenced the “October 2019” crisis, which AM Bank states was the kickoff of poor business decisions made by the ABL after the organization opted to shutter bank operations for two weeks.
Food and power shortages continue to plague the Lebanese people, according to arabnews.com. Water outages have been another issue, with Arab News reporting that the Beirut and Mount Lebanon Water Establishment has been “reluctantly forced” to subject various parts of the country to extreme water rationing.
To make matters worse, a Ukrainian cargo ship packed with more than 26,000 pounds of corn was turned away in Lebanon on Aug. 8. UN News reports that there are 2.2 million Lebanese citizens in crisis.
“The main objective of any bank operating anywhere and in any country must be to safeguard the deposits entrusted to them, as it is not possible to separate between depositors and banks — there are no banks without depositors and no depositors without banks,” AM Bank’s press release reads. “AM Bank cannot stand idly by and expects much more from the ABL leadership that ought to know better.”
With little tolerance for what ABL is doing, Marwan Kheireddine told Forbes Middle East, “The Assembly did not exercise its main role in protecting depositors, who constitute its backbone, and it never moved against the state to preserve depositors’ rights.”
Marwan Kheireddine adds more mistakes were made in the crisis, including failure to protect depositors.
Political Problems Continue To Impede Lebanon’s Economy
The former Lebanese minister of state said political bickering isn’t helping Lebanon’s economy.
“We do not operate as a unified nation. We do not have a proper belonging to Lebanon,” Marwan Kheireddine says. “We are very tribal in a sense. Again, if there is a way to find a class of leaders to come forth and start governing Lebanon in an efficient, transparent, and proper way, Lebanon’s economic power will be unleashed. Political leadership has realized that they cannot continue running Lebanon in a very uncoordinated and corrupt manner.”
Marwan Kheireddine, who ran for a parliament seat earlier this year, says he still sees theprivate sector as playing a role in reigniting Lebanon’s economy.
The former American University of Beirut professor, who also served on the board of the Beirut Stock Exchange as financial adviser to the chairman, is a businessman who brought new opportunities to Lebanon over the years, including the introduction of Virgin Megastores after meeting with Virgin mastermind Richard Branson.
The Columbia Business School graduate also says he keeps his office door open the majority of the time and is always interested in discussing new entrepreneurial ideas.
Empowering Lebanese youth is another route Marwan Kheireddine says Lebanon should focus on more.
“We have a workforce that is way above average in terms of education and in terms of readiness to be part of the productive international workforce,” Marwan Kheireddine says.
The Lebanese business leader also says that Lebanon should be tapping into its large gas reserves — and on the asset side, Marwan Kheireddine says the government of Lebanon is one of the richest governments in the world.
“The government of Lebanon still controls most of the productive industries in Lebanon,” he says. “Lebanon owns and runs all the utilities. The government needs to recognize that what is being called losses is actually debt and they need to go and make those assets work more efficiently in order to be able to generate free cash flows out of them to repay the debt over a period of time.”