The Lebanese pound continues its resounding deterioration, to break the barrier of 15,000 against the dollar on the black market, which controls the actual value of the national currency, while the official exchange rate has become more like an imaginary number, as it is fixed at 1,507 pounds.
Although the collapse of the lira has become a reality for the Lebanese since the start of the economic collapse about two years ago, mid-2019, the collapse of the dollar exchange rate to unprecedented levels in Lebanon’s history is accompanied this time with a reality that is getting more absurd and worse, as if the country jumped into a new stage of the dissolution of its institutions and structures infrastructure, according to several indicators, including:
The failure to form a government since Prime Minister Saad Hariri was commissioned about 8 months ago to implement the internationally required reforms from Lebanon.
Disruption of a large number of basic materials such as infant formula, some medicines and medical supplies
A great shortage of fuel forced the Lebanese to stand for hours a day in queues at gas stations due to the rationing of gasoline.
Electricity cuts of about 18 hours a day threaten the Lebanese people with total darkness.
Huge rise in food prices and chaos in the markets.
Continuing smuggling of basic materials through irregular crossings.
the new poor
The paradox is that the collapse did not exclude any of the Lebanese, and they are racing in search of basic needs after their purchasing power has rolled to its minimum limits, with the lira losing more than 90% of its value, and those who were counted on the middle class are threatened by poverty, and those who were poor are now suffering under extreme poverty line.
After the (official) public sector was a haven for the Lebanese aspiring to provide living and financial stability, given the appropriate salaries and the accompanying benefits and end-of-service indemnities, the employees of this sector, who are in the tens of thousands, are incurring significant losses in the value of their salaries.
This is what the citizen Nelly Habib, 47, who has been employed in an official department in the country for 24 years, says.
Nelly was living stable because of her salary of 3 million pounds, from which she provides for her various needs with her family, and she can save for travel and entertainment.
However, this salary, which was equal to two thousand US dollars, has become equivalent to less than 200 dollars, and its value is likely to diminish as the dollar reaches rates of 15,300 pounds.
Nelly describes to Al Jazeera Net what happened to public sector employees as shocking, after their salaries became insufficient for them to buy food and pay monthly dues, which prompted them to borrow after they were the shelter of their unaffordable relatives.
She gives a simple example of changing the car oil. Before the collapse of the lira, it cost no more than 100,000 pounds, but today it is more than 400,000 pounds, which is equivalent to a quarter of her salary, and two-thirds of the salary of workers who receive the minimum wage (6,500 thousand pounds).
She said she feels frustrated when she remembers that the end-of-service indemnity will lose its value as well, but she fears what comes next, "as it seems more unfair and cruel."
Most of the Lebanese accuse traders of monopolizing basic materials in their warehouses to sell them later at high prices (European)
accusing the merchants
Most of the Lebanese accuse the merchants of monopolizing the basic materials in their warehouses, to sell them later at high prices, especially since the date of lifting the subsidy on basic commodities provided by the government, through the Central Bank of Lebanon, is imminent, according to analysts, as a result of the exhaustion of what remains with the Central Bank of usable reserves in dollars. It had fallen from about $31 billion before the fall of 2019 to about $15 billion.
Here, the head of the board of one of the retail institutions in Lebanon, Hassan Ezz El-Din, believes that the continued collapse of the lira from one hour to another is causing the loss of merchants and the pricing mechanism.
He explains to Al Jazeera Net that it is the brands who raise their prices, and neither the merchants nor the importers who want to protect themselves and their capital, so that they can import goods again.
Ezz El-Din denies monopolizing goods “because all merchants are able to import,” but the problem, according to him, lies in the Central Bank’s delay in opening credits for them to pay their bills in subsidized dollars abroad. As a result of the multiplicity of the exchange rate.
But why does the lira record major declines in short times?
The dollar’s jumps in Lebanon go beyond the economic logic, according to many, whether at the level of motive factors or at the level of time stages.
And if we take the reality of the lira in 2021 only, it turns out that it stabilized in the first two months at rates of 9 thousand pounds, then recorded the first breach of the ceiling of 10 thousand pounds at the end of February 2021, and then economists linked it to the expiry of the period of circular 154 - in which the Central asks banks to increase their capital By 20% and creating 3% liquidity at correspondent banks abroad - as part of a plan to restructure the banking sector.
The Lebanese race in search of basic needs after their purchasing power has rolled to its minimum (European) limits.
central responsibility
Within weeks, in March 2021, the dollar touched the ceiling of 15,000 pounds, then gradually declined to settle at rates of 13,000 pounds, and then jumped a few days ago in June 2021 above 15,000, which economists also linked to other generalizations of the Banque du Liban.
The first is the launch by the Central Bank of an exchange platform (Sayrafa), for participating banks to sell dollars to merchants, based on specific mechanisms, at a price of 12,000 pounds per dollar.
The second, the issuance of the Central Bank about a week ago, Circular No. 158, which allows depositors, starting from the beginning of July 2021, to withdraw 800 dollars per month from their deposits held in commercial banks, and is divided into two parts: 400 dollars in cash and 400 dollars in Lebanese pounds, according to the exchange rate of the exchange platform, i.e. 12,000 pound.
And because the last circular put pressure on commercial banks, researcher and economic expert Khalil Jbara suggests that banks will resort to the black market, in order to collect dollars, which puts pressure on demand.
It seems that the factors driving the instability of the lira are not necessarily economic, according to Jabara’s talk to Al-Jazeera Net, because they are linked to speculation, and the penetration of the black market by political forces due to its small size, in order to exercise popular pressure, and the evidence is that the dollar is recording its heights on the weekend in which operations are declining. Supply and demand.
For his part, Khaled Shaheen, an expert in banking law, points out that the banks, since the beginning of the crisis, have been trying to collect dollars from the market, to secure sufficient liquidity for their requirements from the CBE circulars, but "this is not the reason behind the rise in the dollar exchange rate."
Shaheen links the rise in the dollar's exchange rate to the irregularity of the parallel market because the dollar was recording significant increases even before the Central Bank's circulars, recalling that electronic platforms operating from abroad seek to manage the black market movement as well, but the main factor, according to him, is also political.
The expert believes that some political forces are seeking to benefit from the manipulation of the lira, "in order to further strike the banking sector before implementing each circular, and then accuse commercial banks of buying dollars from the market."
Commenting on this, Khalil Jabara believes that every bank that resorts to collecting dollars from the market is better to close its doors because these actions mean bankruptcy, and that it is unable to secure the depositors' dollars, after losing its ability to survive.
Government sector employees, who are in the tens of thousands, suffer huge losses in the value of their salaries (Reuters)
Failed state?
A new study issued by the Crisis Observatory at the American University of Beirut, on June 14, warned of the danger of Lebanon falling to the rank of failed states, after it fell 36 places over 5 years, to become its rank in 2021 among the 34 most failed countries out of 179 countries.
Among the recommendations called for by the observatory, is to start gradually lifting the current subsidy over a period of two years, while keeping the subsidy on wheat, fuel subsidy and medicines for incurable diseases as partial support.
Khaled Shaheen believes that the central bank's choice was not correct to support basic commodities, but its authority is limited and not punitive, and it is legally obliged to implement what the government and the Ministry of Finance implicitly require.
Many believe that the authorities are putting the Lebanese in front of two options: either to legalize their access to most basic materials, or to provide them at unsubsidized prices, which means that all goods are subject to the chaos of speculation in the black market.
Hence, Khalil Jabara believes that if the Central Bank’s circular 158 in early July does not curb the dollar exchange rate, after granting depositors part of their dollars, this means that Lebanon will be open to various possibilities of collapse, and that the lira will continue to fall into a bottomless abyss. .