Riad Toufic Salameh (; born 17 July 1950) is a Lebanese economist. He previously was governor of Lebanon's central bank, Banque du Liban, from August 1993 until July 2023. He was appointed Governor by decree, approved by the Council of Ministers for a renewable term of six years. He was reappointed for four consecutive terms; in 1999, 2005, 2011 and 2017. Riad Salameh left his position on 31 July 2023 upon the end of his term, and due to the Lebanese parliament's failure in electing a new president and forming a new government capable of appointing a successor he was succeeded by his first deputy Wassim Mansouri in an acting capacity
Although credited for maintaining the stability of the Lebanese pound until 2019, Salameh has been accused of corruption, money laundering and running the largest Ponzi scheme in history; he was additionally labeled "the world’s worst central banker". He is currently under sanctions by Canada, the United Kingdom and the United States.
Early life Riad Salameh was born in Antelias in 1950 into a Christian Maronite family of successful business people, long based in Liberia. His father Toufic Salameh owned the Cedars Hotel in Broummana, and his mother Raniah was a "well-known charitable activist" and Lebanese Red Cross member who was murdered in 1982. He has three siblings.
Salameh grew up in his grandfather's house in Antelias, and attended the Jesuits' Collège Notre Dame de Jamhour, followed by a bachelor's degree in economics from the American University of Beirut.
Career
Merrill Lynch From 1973 to 1993, Salameh worked at Merrill Lynch in Beirut and Paris, as an executive manager, and then became a vice-president and financial advisor. He met with businessman Rafic Hariri, a huge investor in the company, and became his portfolio manager.
Lebanon's central bank After the end of the civil war, Hariri became the prime minister and appointed Salameh as the governor of Lebanon's central bank. He took office on 1 August 1993, and was subsequently reappointed for four consecutive terms in 1999, 2005, 2011 and 2017. Salameh chairs the BDL Central Council, the Higher Banking Commission, the AML/CFT Special Investigation Commission and the Capital Markets Authority.
He is a member of the board of governors at the International Monetary Fund (IMF) and at the Arab Monetary Fund (AMF). In October 2012 he chaired the Boards of Governors of the IMF and the World Bank Group at their Annual Meetings in Tokyo, presiding over the plenary and delivering the opening address on 12 October 2012.
On 1 July 2013 Salameh began a two-year term, ending on 30 June 2015, as non-member co-chair of the Financial Stability Board (FSB) Regional Consultative Group for the Middle East and North Africa. He was chairman of the board of governors of the AMF in 2013.
Post-war stabilisation and banking reconstruction Salameh took office in August 1993, three years after the end of the Lebanese Civil War, at a time of high inflation, a depreciated currency and a banking system weakened by fifteen years of conflict. Within four years, according to the French ambassador Daniel Jouanneau, he had equipped the central bank with modern structures, restored the banking sector's role in financing the country's development, created new financial instruments and rebuilt Beirut's position as a regional financial centre.
The pound, which had lost most of its value during the war, appreciated steadily from 1993 and was stabilised at about 1,507.5 to the United States dollar, a rate fixed from December 1997 that the central bank maintained, through successive political and security shocks, until the financial crisis of 2019. Inflation, which had peaked at nearly 100 per cent in 1992, fell to 0.2 per cent in 1999. Over the same period the central bank accumulated foreign-currency reserves that Euromoney put at about US$13 billion by 2006, equivalent to more than eighteen months of imports, in addition to some US$6 billion in gold.
In the banking sector, the central bank encouraged the consolidation of a fragmented industry through mergers, the largest of which was Bank Audi's acquisition of Banque Saradar in 2004. The Beirut Stock Exchange, closed since 1983, reopened on 22 January 1996 with an electronic trading system developed with the Paris bourse.
Prudential regulation was progressively tightened during the 2000s. The central bank prepared Lebanese banks for the adoption of the Basel II framework between 2004 and 2008 and, from 2004, restricted their exposure to structured and subprime-linked products — a restriction to which Salameh later attributed the sector's resilience during the 2008 financial crisis. The regulatory frameworks for electronic banking (Basic Circular 69 of March 2000) and for the control of banking operations against money laundering and terrorist financing (Basic Circular 83 of 2001) were established in the same period and repeatedly amended, notably in 2013 and 2016.
Institutional initiatives École Supérieure des Affaires The Banque du Liban was a founding partner of the École Supérieure des Affaires (ESA), a business school established in Beirut on 5 April 1996 under a Franco-Lebanese intergovernmental agreement and a convention between the central bank and the Paris Chamber of Commerce and Industry. The school, affiliated with the French ESCP Business School, launched its first programme, an MBA, in 1997, followed by an executive MBA in 1999, a research centre in 2003, a programme in hospital and health management in 2004, Islamic-finance programmes in 2007 and a doctorate in business administration in 2013. The school is co-chaired ex officio by the governor of the Banque du Liban and the French ambassador to Lebanon.
Middle East Airlines In 1996 the central bank became the majority shareholder of the national carrier Middle East Airlines (MEA), acquiring almost all of its shares (99.3 per cent) in return for covering some US$375 million of the airline's accumulated losses. The airline was then loss-making and overstaffed, with losses peaking at about US$87 million in 1997. Under Salameh's governorship a new chairman, Mohamad El-Hout, a former central-bank economist, was appointed in 1998, and a restructuring programme carried out between 1998 and 2002 — fleet renewal, route rationalisation and the departure of more than a thousand employees — returned the airline to profit in 2002, with net profits of US$22 million in 2003 and US$50 million in 2004. MEA joined the SkyTeam alliance on 28 June 2012 as its seventeenth member.
2005 political crisis and 2006 war The assassination of Rafic Hariri on 14 February 2005 set off the most serious financial shock of Salameh's first decade in office. In the weeks that followed, about US$2 billion in deposits left the banking system and some US$5.5 billion of pound-denominated deposits were converted into dollars. The central bank intervened in the foreign-exchange market, drew on its reserves, conducted swap operations with commercial banks, raised interest rates and issued ten-year dollar certificates of deposit yielding about 10 per cent, designed to keep the banks' foreign assets in Lebanon.
Confidence returned within months. Deposit inflows resumed in the second half of 2005, a US$750 million Eurobond issue in October 2005 was heavily oversubscribed, and by March 2006 the spread on Lebanese sovereign debt had narrowed to roughly 180 basis points, in line with the emerging-market average.
When the 2006 Lebanon War broke out in July 2006, the central bank kept banks open and supplied foreign currency and liquidity throughout the conflict. Euromoney reported that Lebanon avoided a financial-market collapse, a bank run and a sell-off of the currency, and attributed this to the reserve position built up in the preceding years and to Salameh's handling of the crisis; the magazine described him as Lebanon's "financial firefighter". Its Central Bank Governor of the Year award, presented to him in Singapore in September 2006, cited his record over his tenure as a whole rather than the 2006 war alone.
Paris II and Paris III conferences The central bank took part in the two international donor conferences convened in Paris to support Lebanon's public finances. At the Paris II conference of 23 November 2002, donors pledged about US$4.4 billion in concessional loans, most of it to refinance Lebanon's public debt at lower cost. As part of the accompanying domestic effort, the central bank agreed to reduce the interest it received on the government debt it held, and the commercial banks subscribed to two-year zero-interest government securities equal to 10 per cent of their deposits, about US$3.8 billion. The Paris III conference of 25 January 2007, held after the 2006 war, produced pledges of about US$7.6 billion in loans and grants from 38 states and institutions, tied to a government reform programme.
Subsidised lending and stimulus programmes From the early 2000s Salameh extended the central bank's role beyond conventional monetary policy into development finance. Through a succession of circulars, the Banque du Liban exempted commercial banks from part of their reserve requirements, and subsidised interest, in proportion to the loans they extended to designated sectors — agriculture, industry, tourism, information technology and environmental projects among them. From 1999 banks were allowed to draw on up to 15 per cent of their reserves held at the central bank to fund housing loans through the Public Corporation for Housing (Établissement public de l'habitat) and other institutions. From November 2010 the National Energy Efficiency and Renewable Energy Action (NEEREA), a financing mechanism managed by the central bank with the support of the European Union, offered subsidised loans for energy-efficiency and renewable-energy projects; by early 2015 it had financed more than 200 projects worth over US$250 million. Loans to small and medium-sized enterprises guaranteed by Kafalat, a loan-guarantee company set up in 2000 by the National Institute for the Guarantee of Deposits and the commercial banks, benefited from interest subsidies administered by the central bank and from a partial exemption from reserve requirements.
In 2013 the central bank launched a stimulus package of about US$1.46 billion in credit facilities to banks at 1 per cent interest, to be lent on at subsidised rates for housing, productive sectors, education, renewable energy and start-ups; a further package of about US$800 million followed in 2014, and comparable packages were renewed each year until 2018, totalling more than US$6 billion. Housing loans absorbed the largest share of these facilities. In early 2018 the housing allocation was exhausted within weeks and the subsidised housing scheme was frozen for almost a year, contributing to a sharp slowdown in the property market. The International Monetary Fund described these programmes as quasi-fiscal schemes — some US$4.4 billion of subsidised credit, mostly to real estate, between 2013 and 2016 — that had weakened the central bank's income position, and urged it to withdraw from them.
Circular 331 and the start-up ecosystem On 22 August 2013 the Banque du Liban issued Intermediate Circular 331, the most visible of the initiatives by which Salameh sought to diversify the Lebanese economy towards what the central bank called the "knowledge economy". Under the circular, the central bank guaranteed 75 per cent of the equity that Lebanese commercial banks invested in start-ups, venture-capital funds, incubators and accelerators, so that a bank would lose at most a quarter of its investment if a company failed. Investment was capped at 3 per cent of each bank's capital, an envelope initially estimated at about US$400 million; an amendment of April 2016 raised the ceiling to 4 per cent, or roughly US$650 million.