Karim Souaid becomes Lebanon’s first permanent central bank chief since Salameh

Souaid will play a pivotal role in restoring international confidence in Lebanon's financial system

A protester outside a Bank Audi branch in Beirut in 2023. Lebanese have been gripped by poverty after plunging into a financial crisis in 2019. AP Photo

Wealth manager Karim Souaid was appointed as Lebanon’s central bank governor on Thursday, filling a position that had been held by an interim chief since July 2023.

The decision was made after 17 of the 24 cabinet ministers supported Mr Souaid in a session held at the presidential palace in Baabda.

His appointment follows a weeks-long contentious battle that divided the government and tested Lebanon’s commitment to reforming its crisis-stricken economy. Mr Souaid replaces interim governor Wassim Mansouri, who had overseen the central bank since the departure of longtime chief Riad Salameh, whose 30-year tenure ended in disgrace in 2023.

The appointment of a central bank chief is critical for Lebanon as the Middle East country seeks to implement economic reforms and address the financial losses incurred since the 2019 crisis, which was further exacerbated by the year-long war between Israel and the Lebanese Iran-backed militant group Hezbollah.

Mr Souaid will play a pivotal role in managing the banking sector's restructuring and in restoring international confidence in Lebanon's financial system. He will also be expected to combat corruption and curb illicit financing for Hezbollah through the banking system.

His selection was preceded by internal disputes, sources with knowledge of the matter told The National. President Joseph Aoun backed Mr Souaid, known to have strong ties to Lebanon's banking sector, while Prime Minister Nawaf Salam opposed his nomination. It marked the first serious divergence in views over top appointments by the two men since they came to power earlier this year.

Karim Souaid, Lebanon's new central bank governor, is known to have strong ties to the country's banking sector. Photo: Growthgate Capital

Speaking after the cabinet meeting, Mr Salam said he had "reservations" about Mr Souaid's appointment. He did not give specific details, but spoke of a "desire to protect depositors' rights and preserve the state's assets", referring to Lebanese who lost their life savings in the economic crash.

Mr Souaid "must adhere, from today, to the financial policy of our reformist government ... on negotiating a new programme with the International Monetary Fund, restructuring the banks, and presenting a comprehensive plan" to preserve depositors' rights, Mr Salam said.

Diplomatic sources noted that while the US and France refrained from endorsing a specific candidate, there was broad consensus on selecting a governor committed to implementing the reforms sought by both the Lebanese and the international community, as well as advancing an International Monetary Fund (IMF) programme aimed at addressing Lebanon’s economic crisis.

Profile: Lebanon's new central bank chief Karim Souaid faces daunting task

In April 2022, Lebanon reached a staff-level agreement with the IMF on a comprehensive economic reform programme supported by a 46-month Extended Fund Facility, proposing access to approximately $3 billion. But to unlock the IMF aid, Lebanon must implement several critical reforms that – with the Lebanese authorities accused of dragging their feet in doing so.

Mr Salam's government, installed last month, is looking to resume talks with the IMF. Earlier this month, an IMF fact-finding mission visited the country and held what it described as "productive" discussions with Lebanese officials.

Western and Arab countries have also set reforms as a condition to provide any reconstruction support to Lebanon, large swathes of which were left in ruins by Israel's military campaign last year.

Mr Souaid is the founder and managing partner of Growthgate Partners. Critics of his candidacy expressed concerns about his close ties to Lebanon's banking elite.

Other potential contenders included Samir Assaf, a businessman with close ties to French President Emmanuel Macron, IMF’s Middle East Director Jihad Azour and former Labour Minister Camille Abousleiman.

None of the rumoured candidates were regarded as positive by the Lebanese Depositors Union, a member of the union told The National after meeting with Mr Salam on Wednesday.

"Nawaf Salam has said that if Souaid wins, it’s not the end of the war. It’s a battle lost but we should continue,” said the union member. “Although I believe that if someone like him wins, it would be a significant setback, and I don’t think we will recover anytime soon.”

“We believe, first and foremost, that [the governor] should be someone clean. They don’t necessarily have to be a business-person – we’ve seen where that has led, just like with Riad Salameh – because they would ultimately treat it as a business,” added the member, noting that the governor should also oppose the use of Lebanon’s gold reserves and state assets.