Facing the worst economic recession in Lebanon’s modern history, the government asked the central bank to subsidize fuel, medicine, wheat, and 300 other items. LIMS argued that this policy will drain foreign exchange reserves within 3 months and brutal consequences lie ahead unless a miracle happens. The organization explained that the current smuggling of products to Syria is due to subsidies, causing shortages at home, and stimulates the black market.  Unfortunately, the vulnerable population does not reap the benefits of the subsidy program. Instead, the wealthiest purchase these items in bulk and then resell abroad for a marked up price, earning a hefty profit. In the end, the policy is leaving Lebanon’s shelves empty and the black market busier than ever. 
As a matter of fact, the current government blamed previous cabinets for subsidizing the Lebanese pound (LBP) pegged at an overvalued rate of 1,507 LBP to the dollar. Yet the purpose of the current policy seems to hold onto an unofficial market rate at around 7,000 LBP to the dollar, as importers of the subsidized items are getting their dollars from the central bank. Such a plan resulted in stabilizing the exchange rate, at the cost of depleting the central bank’s reserves at a rate of nearly $600 million a month. Once the reserves are gone, importers will have to get their dollars from the black market and the Lebanese pound’s rate will collapse. 

Since the dreadful Beirut explosion that took place on August 4th, the economic consequences are nothing short of disastrous. LIMS declared that the government does not have the means to compensate for the losses of the victims and warned against using the blast to justify printing more money. Instead, victims should be allowed to withdraw their dollars deposits from the bank in dollars, rather than giving them no choice but to withdraw in LBP at an unfair rate. Foreign exchange reserves that are being used to finance controversial government projects like the water dams and the powerships, should be redirected to allow victims to withdraw their money.  
On another hand, retailers of glass and aluminum were accused of being greedy and taking advantage of the increased demand from the victims to sell more and even raise their prices. LIMS explained that given the harsh recession, virtually all businesses in Lebanon are experiencing extreme financial hardship. The increased demand on glass and aluminum might help retailers reduce their losses, but they are certainly not making gains. As for the high prices, the real reason resides in hyperinflation and the policy of paying government debt through printing more Lebanese pounds. 

Many people still reminisce about the golden age in Lebanon, when it was labeled the “Switzerland of the East” for its prosperity and booming economy. Kristelle Mardini, the director of LIMS, clarified that Lebanon’s success was due to its free market economy that attracted investors up until the late 60s. Then, after the gruesome civil war, that economic model changed and the government began interfering in all sectors of the economy, like the electricity, airlines, and telecom, among many others. Subsequently, monopolies were created that enabled corruption and the inefficient management of vital industries. This led to the borrowing policy and thus the national debt has seen an exponential growth ever since. 
Consequently, the government defaulted on its debt earlier this year and resorted to printing the local currency to keep funding its expenditures, which has led to hyperinflation. Lebanon can regain its old prosperous status with a return to a free market economy and competition. Such a policy would free the government of its financial load and would provide people with better and cheaper services. Auctioning the seaports in Lebanon to private companies could be the first step to free the economy once more. They’d be tasked with rebuilding, operating them more efficiently, and improving their service quality.