The wheel of collapse continues to turn, after about half of the population of Lebanon has become poor, and a large group of them live in extreme poverty, according to estimates, due to their need for urgent assistance to prevent them from being deprived of the basic necessities of living in dignity.

And because removing subsidies on basic commodities provided by the government through the Central Bank of Lebanon has become an inevitable option;

Many people raise questions, after the caretaker prime minister, Hassan Diab, linked it to the actual implementation of the "financing card", in support of families with less opportunities, a project prepared by a government committee, and is expected to refer it to Parliament for study and approval.

Black box

For months, news has been circulating that the Central Bank has been unable to continue subsidizing the prices of imported basic materials.

As a result of the depletion of what remained of his usable reserves, while the warnings increased about the risk of compromising his obligatory reserves.

The compulsory reserve ratio at the central bank is 15% of the total foreign currency deposits with banks, that is, about $ 17 billion out of $ 115 billion, and some previously demanded that the central bank reduce this reserve to about 10 or 12%, so another problem arose that the money freed from it must be It belongs to the banks, not to the subsidies;

But observers believe that the Central Bank has become more like a black box, and the Lebanese are ignorant of what it has and what it owes.

The director of cutting and the support officer at the Banque du Liban, Numan Nadour, refuses to disclose what is left of the central bank of the dollar reserves, pointing out that it has drained to a level that prevents the proceeding of the support mechanism itself, because it is a crime against deposits, and only smugglers and traders benefit from it, while the central bank cannot control prices or borders. He put it.

And Nador gives an example of meat that has begun to be scarce from the market or offered at exorbitant prices, not because the Central Bank does not support it, but because the subsidized livestock is smuggled either by land or by air.

Nadour remembers that the Central Bank supports fuel, wheat, medicines, medical supplies and the food basket, and the cost of support in 2020 amounted to more than $ 6 billion, or about $ 500 million per month.

He told Al-Jazeera Net, we have reached an alarming stage, and the central reserve is close to the mandatory reserve, and the government must make a decision to stop subsidies.

Since the fall of 2019, the lira has witnessed a dramatic collapse against the dollar, losing more than 85% of its value, and the exchange rates of the dollar have varied between the official (1507), the platform rate at banks (3900) and the black market price that controls the actual value of the lira, and it is currently about 12,500 pounds.

Here, Muhammad Fahaili, a banking risk expert, notes that since the mid-2020s, the Central Bank has been unable to continue with the subsidy, and has exhausted its dollars, so the markets began to witness massive manipulation of subsidized commodities, their scarcity and chaos in their pricing mechanism, as a result of the gradual lifting of subsidies on them, according to Fahili.

Fahaili told Al-Jazeera Net that the Banque du Liban has financed the corruption of the political authority for decades, and is working today to salvage its failure in various ways.

Since the mid-2020s, the Central Bank of Lebanon has been unable to continue with support (Reuters)

Finance card

In early April, Lebanese Finance Minister Ghazi Wazni said that allocations to finance imports of basic commodities will run out by the end of next May, and in the middle of the same month, the Central Bank called on the caretaker government to put in place a rapid plan to support commodities, to protect what remained of foreign exchange reserves For the country.

Despite the lack of time, a committee in the caretaker government is still working on developing its plan for the "financing card", which is supposed to cover about 750 thousand families, with a monthly amount in Lebanese pounds.

Perhaps the problem hindering the approval of the card is how to finance it, after the international community and the Arab countries linked any financial assistance to Lebanon to the formation of a rescue government and the implementation of the required reforms.

Khader Talib, an advisor to the head of the caretaker government, Hassan Diab, explains that the card project is based on the studies of the government and the World Bank, and it shows that the number of poor families reached nearly one million and 100 thousand, of whom about 70% are below the poverty line, so the "financing card" project includes about 750 A thousand families.

There are 3 official programs in Lebanon that support families: the first is through the Lebanese army, from which about 300 thousand families benefit and get 400 thousand pounds per month (equivalent to about $ 31 in the black market), and the second is through the Ministry of Social Affairs, and about 50 thousand families benefit from it. With assistance amounting to 800 thousand pounds, and the third is the soft loan project program from the World Bank, valued at 246 million dollars, and supervises the preparation of a card aimed at reaching more than 160 thousand poor families (i.e. about 800 thousand people), with assistance amounting to 800 thousand pounds Per month (about $ 65), according to Taleb.

A student pointed out to Al-Jazeera Net, that the "financing card" project includes the families' need for basic commodities, and will provide 800,000 Syrian pounds (about $ 64) for a family of 3 people, to increase 200,000, with each additional person up to 4 children, with the mother and father.

He explained that the standards will be unified in the three programs, in return for ending the government aid program that is distributed by the army, and the "financing card" will cover the difference in aid in the World Bank and Ministry of Social Affairs loan programs.

The dangers of printing the lira

Talib said that the "financing card" would ease the burden of lifting subsidies on citizens, and include employees in the public and private sectors. He added, "We are also working to secure its resources from external donors, the World Bank, or state finances," in addition to the government's endeavor to unify the data of Lebanese families.

Here, the head of the Parliamentary Economic Committee, MP Farid Al-Bustani, notes that the House of Representatives headed by Nabih Berri is awaiting the arrival of the financing card project to work on, and may see light at the end of next May.

But the worrying thing - according to the MP's statement to Al-Jazeera Net - is that the source of financing the card is not clear, and the option may be to resort to printing the lira, because there is no substitute for the card to provide direct cash assistance, in order to provide a social safety net.

The black market rate that controls the actual value of the pound is currently about 12,500 pounds to the dollar, compared to the official exchange rate of 1507 pounds to the dollar (Reuters)

Confusions and blockages

It seems that resorting to printing the lira notes will cause more inflation, according to what the economist Walid Abu Suleiman indicates, and he finds that the financing card project is still within the framework of ideas only.

Abu Suleiman considers that the depth of the economic crisis is related to the uncertainties of the Central Bank, and the conflicting numbers about its dollar reserves.

The "financing card" is fraught with confusions and obstacles, and the economist Abu Suleiman mentions some of them to Al-Jazeera Net:

First, at the level of transparency, the card may turn into a source for political clientelism, if some of the parties in power seek to provide it to their supporters in order to consolidate their influence in preparation for the 2022 parliamentary elections, especially since some parties have resorted to the concept of self-security away from the state.

Second, the inability of the Lebanese authorities to standardize the families' data leads to an injustice in the mechanism for distributing the card.

Third, the bet on the card’s success is weak, because it will not be a solution to the commodity import crisis after the subsidies are lifted.

Fourth, the state’s finances are almost bankrupt, and printing the lira will increase the monetary supply, and lead to a continued deterioration in its value against the dollar, and thus price increases again without a ceiling, which will lose the value of the financing card that covers less than 15% of the losses incurred by the purchasing power in an importing country. More than 80% of his needs are in dollars.

Fifthly, any project to support the Lebanese will not succeed through a caretaker government that is unable to meet, and without international support, especially since linking aid to reforms requires the conclusion of an agreement between the new government and the International Monetary Fund.

Sixth, the financing card will not secure self-sufficiency for its beneficiaries, in light of the deterioration of the Lebanese pound and the deregulation of markets.

Therefore, it will constitute a flight to the front to delay the popular eruption, or an effort to accommodate the Lebanese people with their historical crisis;

After "the country has turned into a vicious circle of intractability, it foretells the difficulty of the coming months."