Lebanon Appoints Karim Souaid as Central Bank Governor Amid Reform Challenges

Beirut: Lebanon’s cabinet has appointed Karim Souaid as the new governor of the central bank, a crucial role in steering the country’s financial recovery. His appointment comes despite reservations from reformist Prime Minister Nawaf Salam, who has urged him to commit to the government’s economic reform agenda.

Key Points of the Appointment

• Karim Souaid, a veteran asset manager, replaces former governor Riad Salameh, whose term ended in July 2023.

• Lebanon’s divided political factions had struggled for nearly two years to agree on a permanent successor.

• First Vice-Governor Wassim Manssouri had been serving as acting governor.

• The position is traditionally reserved for a Maronite Christian under Lebanon’s sectarian power-sharing system.

Who is Karim Souaid?

• Founder and managing partner at Growthgate, a Gulf-based private investment firm.

• Previously worked at HSBC Bank and participated in privatization initiatives across Arab countries.

• Holds a law degree from St. Joseph University in Lebanon and Harvard Law School.

• Former corporate finance attorney in New York and a member of the New York State Bar Association.

Concerns Over the Appointment

Prime Minister Nawaf Salam expressed concerns about Souaid’s ties to Lebanon’s banking sector and political elite. While not explicitly opposing his selection, Salam emphasized that Souaid must adhere to the government’s financial recovery plan, which includes:

• Negotiating a new deal with the International Monetary Fund (IMF).

• Restructuring Lebanon’s banking sector.

• Developing a comprehensive plan to protect depositors’ rights.

Lebanon’s Economic Crisis and IMF Deal

Lebanon has been in a deep financial crisis since 2019, with the local currency losing most of its value, pushing much of the population into poverty, and restricting access to bank deposits.

In April 2022, Lebanon reached a preliminary agreement with the IMF for a $3 billion loan, but required economic reforms remain unimplemented. The IMF has welcomed the new government’s engagement, stating in February that it is open to new negotiations.

Next Steps for Lebanon’s Financial Sector

• The government has approved a draft law to amend banking secrecy regulations.

• The new governor will play a crucial role in shaping Lebanon’s financial policies, debt restructuring, and international negotiations.

• Analysts and institutions, including Beirut-based think tank The Policy Initiative, view the appointment as a test of the new government’s commitment to reform.

Souaid’s six-year term begins at a time when Lebanon is under pressure to implement meaningful reforms and restore confidence in its crippled financial sector.