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Safadi: Lebanon not alarmed by U.S. action against exchangers

Finance Minister Mohammad Safadi. (The Daily Star)

Lebanon is not alarmed by the U.S. Treasury Department’s sanctions this week against two Lebanese exchange houses accused of money-laundering, caretaker Finance Minister Mohammad Safadi said in an interview Thursday.

“We are confident that the central bank has been taking every necessary measure to make sure that what they’re accused of is most probably not true,” Safadi said.

The U.S. Treasury Department accused Kassem Rmeiti & Co. For Exchange and Halawi Exchange Co. of money laundering. The sanctions were taken under Section 311 of the USA Patriot Act, the first time that section was used against a nonbank financial institution, the Treasury said in an statement Tuesday.

Safadi said he had been aware of signs that “we could have a problem with one of the money exchangers,” not two.

Separately, he said, the Finance Ministry swapped more than $1 billion debt with the Central Bank Tuesday. The operation entails the Central Bank giving Treasury bills in Lebanese pounds for the equivalent of $1.35 billion to the ministry, which will issue dollar bonds for that amount, the bank’s Governor Riad Salameh said in an April 19 interview. Swaps have now been done to a total of $4.1 billion, Safadi said.

“The interest rates on Lebanese bonds are much higher than the interest rates that we give on eurobonds so when there’s a swap from Lebanese bonds to eurobonds that reduces the cost of debt to us,” Safadi said.

Lebanon is the most indebted Arab country, with a debt-to-GDP ratio of more than 130 percent.

 
A version of this article appeared in the print edition of The Daily Star on April 26, 2013, on page 5.

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