LIMS sees that capital controls are too little too late now, as most politically exposed persons (PEPs) and their cronies already transferred their money abroad over the last year and a half. The remaining deposits belong to regular people with no political backing. Capital controls will indeed allow depositors to withdraw a tiny fraction of their money, but funding these arrangements raises serious concerns. Banks would rather the central bank disburse dollar withdrawals from the remaining required reserves. Meanwhile, the central bank is pushing for the use of banks’ deposits at their correspondent banks abroad. 
LIMS also noted a fatal flaw in the proposed capital control law, namely privileges given for students’ money transfers, mortgage payments abroad, and other foreign obligations. Those loopholes risk being granted by the banking system to undeserving individuals and denied to eligible applicants. 
LIMS recommends that capital controls on old deposits be permitted for banks, in exchange for establishing a currency board. A currency board would set the foundations for a healthier banking system, preventing a repetition of the same mistakes in the future. It would also stabilize both the currency and the economy, thus allowing banks to get back to business. 

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At present, the central bank is down to the required reserves and unable to finance the subsidy policy any further. The Lebanese caretaker government found itself compelled to lift subsidies that cost $6 billion per year. In fact, the government is looking to implement a quasi-universal basic income (QUBI) using cash cards that cover the basic needs of all Lebanese citizens. LIMS acknowledged that a QUBI is more cost efficient than subsidies, but the plan needs financing. LIMS rejected funding the program using the central bank’s required reserves. It is immoral to forbid depositors from withdrawing cash dollars from their banks, and then squandering their money on government programs. In the absence of an alternative form of financing, repealing subsidies coupled with establishing a currency board remains the only solution. Such measures would decrease the price of non-subsidized goods and offsetting the increase in the prices of subsidized items.

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By moving faster than the parliament’s capital controls law, the central bank can take the credit for letting people withdraw a part of their money from banks. Having access to fresh dollars would allow the public to better adjust when subsidies are lifted and offers a better alternative to the wasteful subsidy program. With no more subsidies on the table, importers will have to demand dollars on the black market. Yet depositors withdrawing cash dollars would increase the dollar supply in the market, potentially reducing market imbalances. As for the poorest families that do not have bank accounts, a World Bank grant has already been offered to Lebanon to directly support them. 
However, LIMS focused on the source of funding for those withdrawals and highlighted the conflict between banks and the central bank. Banks would want the dollars to come from the required reserves getting their cherished capital control law without any cost. While on the other hand, the central bank prefers the banks themselves to fund those withdrawals using their money at the correspondent banks abroad. As for Lebanese pounds withdrawals, they risk being financed using inflation. In short, LIMS believes that the focus should be on finding ways to increase foreign exchange reserves and stop printing money, rather than the reverse. 

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The announced purpose of SAYRAFA is to stabilize the Lebanese pound’s exchange rate to the US dollar’s, although LIMS doubts its effectiveness. Squandering more foreign exchange reserves to satisfy the local demand for dollars may only work for a brief moment in time. The causes that led to hyperinflation and currency devaluation are still lingering, namely the monetization of the sovereign debt and budget deficit. LIMS reiterated lasting monetary stability is directly linked to the total supply of Lebanese pounds, and as long as money printing persists, the exchange rate will be boundless. Additional printed banknotes are eventually converted into dollars, thus driving the dollar price against the Lebanese pound up indefinitely.
LIMS has been insisting that the only solution to the monetary crisis is the adoption of a currency board. Establishing such a system would prohibit the central bank from issuing unbacked banknotes and from channeling bank deposits to finance government spending. A currency board can stabilize and fix the exchange rate in as little as 30 days, making way for an economic recovery, while attracting investments and capital inflows.

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As for the wage increase, LIMS explained that wages should be correlated with productivity. In the current recession, imposing a wage hike on the private sector will put employers out of business and reduce employees’ income, rather than increasing it, as it will make them unemployed. In the public sector, employee productivity is already extremely low and the government does not have money to pay existing wages, let alone an adjustment. 
LIMS has suggested dismissing unproductive employees from their work at public institutions, as a way of increasing productivity. Also, the public sector’s deficit should be addressed by allowing private companies to provide the services currently offered by government-owned monopolies operating at a loss, most notably in the electricity sector. Furthermore, the government should immediately begin negotiations with international creditors that hold Lebanese Eurobonds. This is a crucial step to take, if Lebanon wishes to regain trust and credibility among the international community and recover economically. LIMS insisted that only through stimulating economic growth, can employees get better wages and depositors start recovering their money. 

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