BEIRUT. Dec 11: This month's change of government in Beirut poses no threat to the stability of the Lebanese pound, the central bank said yesterday, adding that it backed proposals for a sharp increase in taxation to tackle the yawning budget deficit, reports AFP.

Monetary stability has been maintained despite the important political changes witnessed In the country." central bank governor Riad Salame said.

"During the past few years, the central bank has developed monetary Instruments and established confidence in the Lebanese pound which has become less sensitive to political developments," Salame said in an interview published in the leading An-Nahar daily.

Fears of a sharp fall in the value of the Lebanese currency failed to materialise after the shock November 30 exit of billionaire Prime Minister Rafik Hariri, who until then had been

to Lebanese currency

considered the only guarantee of monetary stability.

Lebanon's new President, Emile Lahoud, had roundly criticised Hariri's six-year period in office in his investiture speech on November 24 and the billionaire businessman was replaced by economist Salim Hoss.

The pound fell slightly from 1.502 to the dollar before Hariri's departure to 1,515 on Wednesday.

The central bank intervened on the currency markets swelling about 180 million dollars from its reserves, which bankers estimate stood at 3.7 billion dollars at the end of November.

But the central bank had been forced to engaged in far more costly interventions on the currency markets after Hariri threatened to intervene several times in the past.

Economists put the cost to the Lebanese treasury of main-

taining the value of the pound during Hariri's six years in office at about seven billion dol-

The election of Lahoud, a man reputed for integrity in a country suffering from widespread corruption, strengthened the value of the pound boosting foreign currency reserves by around 600 million dollars.

Salame. who was close to Hariri, said he backed the new prime minister’s plans to tackle the yawning budget deficit whicn he said had reached 22 per cent of gross national product in 1997 because of the costly post war reconstruction projects and the need to ameliorate purchasing power.

But he added that the Hoss government should also continue the multi-billion dollar reconstruction programme launched by Hariri after the 1975-1990 civil war and maintain growth at between four and five per cent.