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Tuesday, May 21, 2024

Lebanon ‘following in Venezuela’s footsteps’

Lebanon ‘following in Venezuela’s footsteps’

In less than 24 hours, Lebanon’s currency dropped in value by over 10,000 Lebanese pounds, with the exchange rate nearing 70,000 to the dollar — a plunge that comes at a time when Lebanese were dreading the exchange rate reaching 50,000 to the dollar.
Economist Jassem Ajaka told Arab News: “We are following in the footsteps of Venezuela. The central bank’s intervention to stop the local currency from depreciating this fast will not work as long as there is no government action.”

Ajaka said he believed that the problem lay in the Lebanese structure, lack of confidence in politics and judges, and the conflict with the international community over Lebanon’s failure to pay its debts.

To avoid losses, commercial and service institutions priced their products based on a much higher exchange rate, in anticipation of further devaluation. Such action significantly decreased citizens’ purchasing power.

The price of a 20-liter canister of fuel jumped by 147,000 Lebanese pounds within 24 hours, reaching 1,147,000 LBP ($19 based on the exchange rate of 60,000 LBP/USD), which is equivalent to the salary of a public sector employee.

The unstable exchange rate pushed the owners of grocery stores to either close for the day or stop selling certain products.

More protesters took to the streets in rural Lebanese areas on Friday, blocking roads with burning tires. The Baalbek International Road was completely cut off in protest against the economic situation. Protesters also blocked Al-Minya International Road in northern Lebanon in both directions, in protest against the deteriorating living conditions.

The Ministry of Economy issued a decision raising the price of a big bundle of Arab bread to 29,000 LBP (48 cents).

With prices soaring, some taxi drivers opted to stay in one region to avoid wasting fuel in traffic jams, constantly changing their fares depending on the exchange rate.

For the first time ever, the pharmacists’ syndicate in Lebanon called on its members to close their pharmacies in protest against the current situation.

“Pharmaceutical suppliers and warehouse owners completely stopped delivering medicines nearly a week ago. The syndicate of pharmaceutical importers will only deliver medicines now based on a daily issued price list, similar to gas stations,” the syndicate said in a statement.

Joe Salloum, head of the syndicate, said: “The price differences between the Ministry of Health index and the exchange rate on the black market are among the reasons that almost led to the sector completely collapsing.”

Robert, a pharmacist in Beirut, said that he sold a medicine based on the exchange rate of 50,000 LBP/USD, according to the Ministry of Health index, but the exchange rate on the black market later reached 61,000 LBP/USD, which means he can no longer buy the same medicine without incurring losses.

“Whatever I sell, I can no longer buy. Suppliers are barely delivering drugs and the exchange rate is always changing. Meanwhile, the list of missing medicines keeps getting longer,” he added.

Last week, the hospitals’ syndicate resorted to adopting a procedure that requires patients registered with the National Fund of Social Security to pay for the required medicines, because the state is unable to cover their costs for hospitals due to the unstable exchange rate.

Antoine Yammine, head of the syndicate of owners and investors of domestic gas cylinder filling plants, warned on Friday of the forced closure of plants due to the insane devaluation of the Lebanese pound, as the price of a domestic gas cylinder exceeded 730,000 LBP, about $12 (based on the exchange rate of 60,000 LBP/USD).

Yammine said: “Yesterday, the price list was priced according to the exchange rate of 60,600 LBP/USD, but it jumped to 64,000 LBP/USD on the back market today, which means that yesterday’s sales were all losses. Our capital is eroding by the day. The authorities must put an end to this farce.”

Meanwhile, parliamentary blocs are yet to agree on the election of a new Lebanese president.

Opposition MPs met on Friday after they had participated in Thursday’s protests of the families of the victims of the port explosion in front of the Ministry of Justice after Public Prosecutor Judge Ghassan Oueidat released all those that Judge Tarek Bitar had had arrested.

The MPs issued a statement, saying: “We support the demand for holding Judge Oueidat accountable for the flagrant violations he has committed,” expressing their rejection of removing Judge Bitar and assigning another judge to handle the probe.

They also warned against the dangers created by the presidential vacuum. They reiterated their call and commitment to the provisions of the constitution, which stipulate that parliament is an electoral body that convenes regularly until a president is elected.

Judge Bitar is expected to proceed with his investigations, despite all the judicial objections to the legal study that he referred to in order to resume his work after a 13-month hiatus.

Next week’s interrogation sessions are scheduled to begin on Feb. 6 with MP Ghazi Zeaiter and former minister Mohad Al-Machnouk.

Members of the Supreme Judicial Council and its head Judge Suhail Abboud are still at odds over the fate of Bitar, who is in charge of the probe into the Beirut Port explosion.
Comments

Oh ya 1 year ago
Do not feel left out Americans, the USD will follow suit now that Saudi has dumped the petro dollar, and the BRICS+ setting up a commodity back currency. You time is coming also be patient

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