Lebanon’s caretaker finance minister asks central bank to submit data for forensic audit

An assessment of the regulator is required before the country can tap international aid and a $10bn IMF bailout package

Lebanon’s Finance Minister Ghazi Wazni speaks to Agence France-Presse (AFP) at his office at the ministry in the Lebanese capital Beirut on May 15, 2020. - Wazni said his crisis-hit country was ready to comply with a request from the International Monetary Fund to float its struggling local currency after receiving foreign aid. He also told AFP that Lebanon would also slash by half the number of commercial banks in its oversized banking sector in a bid to alleviate its worst financial crisis since the 1975-1990 civil war. (Photo by ANWAR AMRO / AFP)

Lebanon’s caretaker finance minister has asked the central bank governor to comply with parliament’s ruling and provide information required for a forensic audit.

The audit is supposed to show how funds borrowed by the government from the central bank have been used.

Lebanon needs the financial assessment to secure a $10 billion bailout package from the International Monetary Fund and unlock $11bn of pledges from international donors.

The “insufficient provision of information” required to conduct a proper audit, led Alvarez & Marsal to terminate its agreement with the government last month.

Following the ruling of parliament at its November 27 meeting and a discussion of the president's letter regarding a forensic audit, "the accounts of the Central Bank of Lebanon, ministries, independent interests, councils, funds and public institutions are subject … to a forensic audit without any hindrance or excuse of bank secrecy or otherwise," Ghazi Wazni wrote in a letter to governor Riad Salameh, his office said on Tuesday.

“After consulting the prime minister, and following our previous meetings and consultations, we hope you will implement parliament’s decision, and provide all public administration accounts to forensic accounting audits in accordance with the laws and regulations, and preserving the rights of the state and all parties."

The central bank, known as Banque du Liban, has cited banking secrecy laws from the 1950s that prevent it from sharing all the necessary information requested by the auditors.

The government also has separate agreements with KPMG and Oliver Wyman for accounting audits.

The country defaulted on about $31bn of eurobonds in March, after which its currency plunged about 80 per cent against the US dollar in the black market and inflation surged to 137 per cent in October. Public debt reached $94.8bn as of the end of September with bank assets and deposits continuously declining.

The economy is expected to contract 25 per cent this year, according to IMF estimates.