BEIRUT: Bankers and economists hailed the renewal of Central Bank Governor Riad Salameh’s term for another six years as a step in the right direction.

Salameh, who was credited with stabilizing the Lebanese pound and weathering all the economic crises which struck the region, will certainly pursue the same monetary policy under the government of Prime Minister Najib Mikati.

Bankers in general agree that Salameh has skillfully steered Lebanon since the global credit crunch in 2008 and enforced new laws that prohibit banks from making any investment in subprime real estate projects abroad.

Thanks to a series of measures and memos, foreign currency reserves reached an all time high of $30 billion while bank deposits exceeded $110 billion in the first five months of 2011.

The renewal of Salameh’s term was expected by all observes although there were some media reports that some ministers preferred to replace the current governor with a fresh face.

“The renewal of Salameh’s term will definitely help to increase the confidence in the financial markets and will also increase confidence across the board both inside and outside the country,” Joe Sarrouh, adviser to the chairman of Fransabank, told The Daily Star.

Apart from the banking sector, all economic sectors in the country were reeling under the steep economic crisis which was caused by sharp domestic political differences; the release of the arrest warrants for four Hezbollah members who are suspects in the assassination of former Prime Minister Rafik Hariri; and the ongoing regional turmoil, most notably in Syria.

“The renewal of Salameh’s term was a major and important thing. We needed a legal solution for the renewal of the governor’s term after the previous Cabinet collapsed,” Sarrouh explained.

But Sarrouh stressed that this action alone will not be sufficient to solve all of the country’s problems.

“We want this government to deliver and perform and not engage in empty political talk. It is time for action and words,” he said.

Echoing the mood of the public and many investors, Sarrouh advised the government to tone down their political rhetoric and focus more on solutions.

He believes that Finance Minister Mohammad Safadi will work closely with Salameh in the next stage, especially in terms of debt swapping and the financing of the public debt.

“The first thing we need to do is have a budget. We cannot continue without a budget,” Sarrouh argued.

Lebanon has been without a budget since the assassination of Hariri in 2005 due to the security incidents, resignation of ministers and the 2006 Israeli war on Lebanon.

Louis Hobeika, professor of economics and finance at Notre Dame University, said some ministers who had reservations on Salameh had agreed to renew his term because the market and the banking sector clearly wanted the governor to continue his work.

“Salameh cannot solve all the economic problems all by himself. The government must pass [the] financial and capital market bill which was sitting in the drawers of the Parliament for many years. We don’t have a real financial sector. We only have a strong banking sector,” Hobeika said.

Other economists feel that some of the sectors such as tourism and bourse may not flourish immediately just because Salameh was re-elected as the governor of the Central Bank.

They added Salameh has no power to change the political reality nor compel politicians to end their squabble but at least he can appease the markets.