The World Bank’s “Lebanon Economic Monitor Fall 2022 issue” ranked the Lebanese crisis and economic performance as the worst worldwide. LIMS explained how the uninterrupted currency devaluation and the volatility of the exchange rate continue to hinder the recovery. Throughout December, the black market exchange rate in Lebanon reached a staggering 49,000 Lebanese pounds (LBP) to the dollar. This happened, despite the central bank’s efforts to control the exchange rate, by pumping dollars into the market and buying LBP at a lower rate than the black market through its electronic exchange rate platform Sayrafa.

Given the success of the dollarization of tourism, LIMS recommended an outright dollarization in all sectors. All suppliers have already dollarized their contracts and transactions. Many bills paid by citizens, such as telecommunications, electricity, and fuel, are now priced in dollars. Supermarkets and shops should also be allowed to price their products in US dollars. Once prices are dollarized, contracts, salaries, wages, and taxes would follow. A full dollarization would lead to more stable prices and protect the purchasing power from fluctuations in the exchange rate. 

LIMS argued that the structural factors that led to massive depreciation of the LBP over the past years from 1,500 LBP to the dollar at the start of the crisis, to about 20,000 LBP to the dollar at the beginning of 2022, are still in effect. What determines the LBP’s value is the volume of LBP in circulation, which is going up dramatically. At the start of the crisis, the currency circulating was about 5 trillion LBP, and today it exceeds 65 trillion LBP, which resulted in the currency losing its value. Increasing the money supply is primarily due to the fiscal deficit, as well as the failure to carry out financial reforms. Printing money is used to finance government expenses and to bail out banks. These factors will push the LBP exchange rate to continue to depreciate against the dollar. 

LIMS Media Interviews:

• Between Political Crisis And Financial Speculation…The Dollar Is Likely To Rise, December 9, 2022: Al Modon, Article AR 
• Has Dollarization Of Tourism Sector Become Permanent At Citizens’ Expense? Mardini: Full Dollarization, Provided That It’s Accompanied By Dollarization Of Salaries And Wages, December 10, 2022: Addiyar, Article AR 
• The Million Note Made Sure That Value Of The Lebanese Pound Would Not Return, December 11, 2022: OTV, TV Interview AR 
• The World Bank: Floating Financial Sector Impossible, And Lebanon’s Economic Performance The Worst In The World? December 12, 2022: Annahar, Article AR 
• Lebanon’s Gold, Gone With The Wind? December 13, 2022: Al Rai Media, Article AR 
• A “Fake Stock Exchange”: The Escape Of “Bettors” Reveals What Is Hidden In Dollar Trading, December 15, 2022: Nidaa Al Watan, Article AR 
• Lebanon Strips Expatriates Of Both Their Dollars And Roles, And Exchange Rate Continues To Rise, December 18, 2022: Addiyar, Article AR 
• Central Bank Of Lebanon Dissolves Administrations Of Al Baraka And Fedral, And Appoints Managers For Them, December 20, 2022: Al Jazeera, TV Interview AR 
• Queues Of Lebanese In Front Of Banks Accompanied By Humiliating Procedures To Withdraw Their Money Due To Contradictory Central Bank Circulars And Varying Exchange Rates, December 21, 2022: Al Shark Al Awsat, Article AR 
• Even If Dollar Rate Fell In The Next Two Days, It Will Continue To Rise In The Coming Period, December 21, 2022: Al Jadeed, TV Interview AR 
• Volume Of Lebanese Pounds (LBP) In Circulation Increased In The Last 4 Months From 40 Trillion LBP To Above 90 Trillion LBP, December 21, 2022: Radio Ehden, Radio Interview AR 
• All Lebanese Are “Exchangers”! December 22, 2022: Lebanon Debate, Article AR 
• Lebanese Pound Drops To Historic Low Against US Dollar, December 22, 2022: The Media Line, Article EN 
• Dollar Is Close To Fifty Thousand…More Details About The Exchange Rate With Economist Patrick Mardini, December 26, 2022: AL Jadeed, TV Interview AR 
• What Are The Reasons For The Simultaneous Collapse Of The Economies Of The Countries Allied To Iran? December 27, 2022: Jusur, Article AR 
• Fakrajian: Decline Of The Black-Market Dollar Rate Will Not Last, But Will Be Followed By A Higher Rise Than What We Have Witnessed, December 27, 2022: Beirut24, Article AR 
• Dr. Mardini, On The Banque Du Liban’s Conduct Of: An Official Recognition Of The Exchange Rate Collapse, December 27, 2022: Hadath Online, Article AR 
• Mardini: The Poor Pay The Cost Of Crisis, And Failure To Cooperate With The European Judicial Delegation May Have Repercussions, December 29, 2022: OTV, TV Interview AR