However, some laws in Lebanon have not been applied 20 years after their adoption as ministers prefer to avoid being subject to oversight. Even if the PPL ends up being applied, the authority to conduct tenders and open bids is transferred to the purchasing body (the ministry, public administration, etc.), expanding their powers, instead of balancing them. Another concern is that the new law does not ask bidders to provide the estimated cost for the projects. Therefore, bidders may collude and agree on prices, where the lowest is overpriced, leading to wasteful government spending. Finally, the appointment of the members of the PPA are subject to a flagrant conflict of interest. 

Therefore, participants at the conference suggested: seeking to implement the new Public Procurement Law; ensuring the independence of the PPA; restoring the Technical Assistance Facilities offered by the European Union; securing the funding to launch the electronic platform; publishing the names of the beneficial owners; insisting on providing an estimated cost for the projects; and determining what information is subject to confidentiality based on international practices.

From LIMS’ perspective, the 2022 budget lacks reforms and is quite like its predecessors, as it runs on 7 trillion LBP in deficit. In fact, LIMS expects deficit to be larger because the budget excluded government-owned electricity company’s losses, and inflated expected income relying on a drastic rise of fees, tariffs, and taxes. Higher tariffs and taxes on an already exhausted population will not generate more income, rather it will have recessionary impact. Given the government's inability to borrow from the financial markets, the deficit will be financed through inflation and currency devaluation.

Therefore, LIMS suggested repealing fuel subsidies and adjusting social benefits in a way to eliminate the fiscal deficit and allow the government to build a recovery plan on solid foundations. LIMS also recommended reducing tariffs to offset the currency devaluation and reforming the tax system through the adoption of a flat tax. Making such a move would broaden the tax base.

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LIMS explained that covering EDL’s deficit with a treasury loan, instead of including it in the general budget’s expenses only serves to nominally bring down the budget deficit, giving the illusion of better fiscal discipline. With the government subsidizing multiple failing sectors, the biggest of which are the electricity and telecommunications industries, LIMS objected against all forms of subsidies, as they have repeatedly proven to be disastrous. In fact, the government has nothing to show for the accumulated $48 billion of electricity subsidies, except countrywide blackouts. EDL needs to close its deficit by increasing prices and lowering non-technical losses and the high production cost, rather than through continuous borrowing. Additionally, LIMS stated that the practice of pricing below cost cannot go on, be it for electricity, telecom services, or fuel. Keeping subsidies will only serve to widen the government’s budget deficit, especially with rising oil prices worldwide, due to the war in Ukraine.

Moreover, government-run/protected monopolies must be opened to competition to guarantee better quality, and inexpensive services. Lebanon is the sole country in the world that has government protected exclusive agencies—where specific goods can only be sold by selected businesses. With over 3,000 exclusive agencies, all these entities need to be terminated in favor of a freer imports market.

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LIMS explained that the central bank’s intervention is meant to unify the black-market rate with the Sayrafa platform rate, to give the impression that the numbers from the 2022 government budget reflect reality. Exchange rate stability is also devised to facilitate negotiations with the IMF. LIMS highlighted the inability of this policy to anchor expectations. Consumer prices did not go down with the exchange rate, because businesses have no trust that the new level is sustainable and expect more depreciation in the nearby future. Foreign exchange reserves are in fact diminishing, thus leaving less room for the pursuit of this policy.

LIMS expects the extension of Circular 161 until May at the very least, to sidestep a potential social and economic meltdown on the eve of parliamentary elections. Subsequently, the exchange rate is bound to plummet again by the end of the year for 2 main reasons: (1) a 7 trillion LBP budget deficit that will be covered through money supply and inflation, as Lebanon lost access to financial markets, and (2) the plan to partly convert US dollar deposits stuck in the banks to LBPs, to reduce their bank’s losses.

LIMS reiterated that the ongoing managed float exchange rate regime is not suitable for countries plagued by political instability, security issues, and irresponsible monetary and fiscal authorities like Lebanon. Circular 161 shed light on the benefits of a full dollarization and showed that low-income individuals are the main beneficiaries of a currency substitution. LIMS stated that a full dollarization or a currency board would protect employees’ salaries from devaluation, and would make economic calculations easier for businesses, as well as paving the way for more transparent pricing. Prolonging the managed float, however, will only serve to erode what remains of people’s purchasing power and to throw them into the pits of poverty and hunger.

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LIMS explained that the whole banking system is made up of zombie banks, unable to fulfill their basic functions of taking deposits and giving loans. All banking activities now consist of having clients withdraw their dollar denominated deposits in Lebanese pounds (LBP) at a harsh, below market, exchange rate following the central bank’s circulars. Yet, LIMS criticized the government’s plan showing how the Lirafication leads to hyperinflation and currency devaluation, further pauperizing the population.  Instead, LIMS favored a different approach that would see the public sector (both the government and the central bank) pass sizeable reforms to gradually pay off their debt to the commercial banks, allowing the latter to pay their depositors.

Meanwhile, the central bank announced its latest decision to allow fresh dollar account holders to obtain LBP at the preferential Sayrafa exchange rate when using their debit cards at point of sales and in ATM machines. LIMS clarified that customers would no longer need to withdraw cash dollars and exchange them on the black market, given that the Sayrafa rate is very close to the black market one. In doing so, the central bank hopes to incentivize depositing US dollars at commercial banks again, in turn allowing the Lebanese economy to restart using fresh dollars. 

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