The Lebanese pound recorded a new record deterioration, as the exchange rate against the dollar during the past two days crossed the threshold of 15,000 pounds on the black market, in a continuous free fall since the start of the economic collapse nearly two years ago and on the impact of chronic political paralysis.
Money changers, who refused to reveal their identities, told AFP that the exchange rate of the lira ranged between 15,400 and 15,500 pounds to the dollar on Monday. The lira lost more than ninety percent of its value against the dollar.
Since the summer of 2019, in light of the worst economic collapse in Lebanon, the lira has begun to gradually decline against the dollar, coinciding with a severe liquidity crisis and banks stopping providing depositors with their money in dollars, while the official exchange rate is still fixed at 1,507 pounds.
Last March, the exchange rate of the lira touched 15,000 against the dollar, before returning and improving somewhat. However, on the impact of a severe fuel crisis and political paralysis that cannot be resolved, the lira has returned since the end of last week to decline rapidly against the dollar.
In light of the economic deterioration exacerbated by the explosion of the Port of Beirut and the measures to confront the Corona virus, the Central Bank of Lebanon’s dollar reserves began to dwindle. The authorities, prompted by the Central Bank, have been studying for months the rationalization or lifting of subsidies on the import of basic commodities such as flour, fuel and medicine.
Amid reports of residents’ panic about lifting or rationalizing subsidies, the country has been witnessing a fuel crisis for months, during which fuel prices have gradually increased, and intensified in the past weeks, and the Lebanese are waiting in long queues at gas stations, which have adopted a policy of rationing in the distribution of gasoline and diesel.
This coincides with the interruption of a large number of medicines, which prompted pharmacies to announce a two-day strike last week. The prices of bread and most of all imported foodstuffs also increased.
The World Bank warned this month that Lebanon’s economic and financial crisis ranks among the ten most severe crises, and perhaps among the three worst since the mid-nineteenth century, criticizing the official failure to implement any rescue policy amid political paralysis.
While the international community requires the authorities to implement urgent reforms in exchange for necessary financial support to get the country out of the cycle of collapse, Lebanon has plunged since the port explosion, which was followed by the resignation of the government, into political paralysis. Since his appointment in October, Prime Minister-designate Saad Hariri has not been able to complete his mission, despite international pressures led in particular by France.
Instead of intensifying efforts to form a government capable of implementing reforms, the exchange of accusations of obstruction still prevails, especially between Hariri and President Michel Aoun. And local reports talk about the possibility of Hariri apologizing for completing his mission.
© 2021 AFP