Lebanese parliament speaker warns against sacking central bank governor

BEIRUT (Reuters) - Lebanese parliament speaker Nabih Berri has warned that removing the central bank governor would send the currency tumbling and threaten deposits, after the prime minister slammed Riad Salameh for the pound's fall.

Prime Minister Hassan Diab on Friday cast Salameh as responsible for a currency crisis that has threatened to further destabilise a country already in dire financial straits.

The pound, which has lost more than half its value since October, slid to record lows on a parallel market last week, nearing 4,000 to the dollar before currency dealers on Friday went on strike. The official pegged pound rate of 1,507.5 to the dollar is available only for certain vital imports.

In comments carried by Sunday's An-Nahar newspaper, Berri said Lebanon could not afford to remove Salameh just as it was entering negotiations with foreign bondholders after defaulting on debt obligations last month.

"Lebanese will wake up to the price of the dollar at 15,000 pounds," he said.

"I am not defending Salameh or anyone, I am defending Lebanon. And if the central bank of Lebanon does not remain, then everyone knows that depositors' funds are gone forever."

The politically influential Maronite Christian patriarch said criticism of Salameh would only hurt Lebanon.

"We ask: who benefits from the destabilisation of the central bank governorship?" said Patriarch Bechara Boutros Al-Rai. "We know the dire outcome, which is eliminating the confidence of the Lebanese people and (foreign) states in the constitutional foundations of the state."

Lebanon is governed according to a sectarian system that parcels out state positions according to religious group. The central bank governor is always a Maronite Christian while the premier is always a Sunni Muslim.

Diab's government was formed in January with the support of the powerful Iranian-backed Shi'ite movement Hezbollah, and has struggled to enact the economic reforms demanded by foreign donors.

Gebran Bassil, head of President Michel Aoun's Maronite Christian party, echoed much of Diab's criticism of Salameh, saying the central bank bore "great responsibility" for losses of currency reserves and lack of transparency and coordination.

He said the state must now "correct" these mistakes, denying that this would constitute a "coup against the free financial system or central bank independence".

The pound's rapid fall has triggered small protests and raised the prospect of price hikes and broader unrest at a time when unemployment has soared and a coronavirus lockdown has dealt an additional blow.

On Saturday, a small bomb was detonated outside a commercial bank in the southern city of Sidon, damaging its facade. A bank in the city of Tyre was attacked with petrol bombs early on Sunday, security sources said.

The attacks did not result in any injuries and the assailants remain unknown, the security sources said.

(Reporting by Eric Knecht; editing by Peter Graff and Kevin Liffey)