Participants engaged in the YALA Program delivered an outstanding advocacy campaign to address the barriers preventing tourism in Tripoli namely: the lack of security, cleanliness, and accommodation. The campaign started on social media and built a grassroot momentum highlighting how Tripoli suffers, such as through distortion, defamation, and inequality. Participants produced a short 26 second video that reached 38,886 people, 43,086 plays, 1,113 likes and 671 shares on Instagram. The video was also shared on Facebook and 71 stories were created on Instagram related to the campaign. The hashtag they created: Ahla Bhal Talleh in Tripoli “اهلا_بهالطلة_بطرابلس#” trended on Twitter, being among the top five.

LIMS believes that the budget is overly optimistic regarding expected revenues resulting from the increase in taxes, fees, and the customs dollar (tariffs). First, the year 2022 is almost over, and therefore new tariffs and taxes will only apply to the remaining four months of the year.  Second, increasing the customs duties using the “customs dollar” will not lead to the projected revenues, since customs evasion would be incentivized. Many businesses would simply evade tariffs due to the large loopholes in the multi-rate system imposed, along with the corruption in the customs department. Tariff evasion is quite easy in Lebanon and businesses will either resort to it or shut down. Smugglers would also benefit from the increased tariffs at the expense of honest and legal businesses, and Lebanon would see a price hike for many goods.  Third, increasing tariffs in a time of extreme crisis and poverty, would further stifle the market and intensify the crisis, while the actual government revenues would fall well below the anticipated amount.  

LIMS opposed adding a new exchange rate dedicated to tariffs and suggested using the floating central bank’s Sayrafa platform rate. At the same time, LIMS suggested the simplification and reduction of tariffs substantially through using a unified flat rate on all imported items somewhere between 0% and 2%. Consequently, the increase in the “customs dollar” would be offset by the decrease in tariffs. Reforming customs in this way would positively impact consumers, while simultaneously rendering tariff evasion less tempting, in turn increasing the overall revenues.

LIMS stated that the number one reason for poverty in Lebanon is due to the LBP’s devaluation. In most of the country, people get their salary paid in the local currency, while the market prices are shifting toward unofficial dollarization. LIMS argued for a full and official dollarization that would enable businesses to price in dollars. After being allowed to price in dollars, businesses would be able to dollarize salaries, thus protecting the remaining purchasing power of their employees. Only then, taxes and tariffs can be dollarized. And the central bank can buy back all the LBPs in deposits and in circulation. From this perspective, the “customs dollars” are misplaced since the government is asking businesses to dollarize their customs’ payment, while imposing on them to price in LBP. Alternatively, Lebanon could adopt a currency board that would clone the LBP to the USD, so to speak, meaning that the entire money supply in LBP would be 100% covered by the reserve currency. Having a currency board in place would allow for LBP and dollars to be simultaneously in circulation. 

LIMS views the central bank’s announcement as a beneficial step and should have happened a long time ago. The institute also called for subsidies to be stopped entirely. As long as the subsidy program is active, the central bank’s foreign reserves will continue being siphoned. Those reserves are actually what remains of dollar denominated deposits placed by people at commercial banks. In reality, those commercial banks deposited the funds at the central bank. Thus, the continuous squandering of such deposits is making financial solutions related to bank depositors much more difficult. 

Due to importers having to buy their dollars from the black market, the public wonders about the likelihood of a further Lebanese pound (LBP) devaluation. LIMS explained that as long as the money supply is constant, the lifting of subsidies will not impact the exchange rate. For illustration, without more LBPs in the market, the demand for dollars will not spike, but only shift to essential products, such as gas. However, the continuous increase in the money supply will, regardless of subsidies, up the demand of foreign currency, thus devaluing the LBP.

LIMS Media Interviews:

For over two decades, Lebanon’s electricity sector has been in dire straits. Now though, with an unsettling economic crisis, obtaining and maintaining energy has become a no-win situation for residents and businesses alike. Although the government-owned power company Electricite du Liban (EDL) has had a monopoly over the sector, EDL has been incapable of providing 24-hour electricity. To provide a clearer picture, EDL-generated electricity averages about two hours per day across the country. Despite Law 129 being passed in 2019 asking the government to allow the private sector to build and operate electricity facilities, the government failed to grant any licenses.  

LIMS Media Interviews:

• Solving Electricity Dilemma: By Privatization Or Liberalizing The Market? August 13, 2022: Lebanon 24, Article AR