Lebanon: After Protests, Government Vows To Halt Depreciation

Lebanese authorities pledged on Friday to inject dollars into the market in an attempt to stem the unbridled depreciation of the national currency, after nightly protests denouncing the authorities’ wait-and-see attitude to the country’s sinking economy.

The gradual collapse of the Lebanese pound was accompanied by an explosion of inflation, not to mention business closings and mass layoffs, a crisis made worse by the two-month containment measures against the coronavirus.

The economic stagnation – added to a shortage of dollars, a currency commonly used in Lebanon – was one of the catalysts for an unprecedented uprising, launched in October 2019 to denounce a political class almost unchanged for decades, accused of corruption and incompetence.

During the night of Thursday to Friday, the Lebanese took to the streets, burning tires and blocking roads. In their sights: the governor of the Central Bank, Riad Salamé, criticized for his inability to stop the depreciation. But also the government of Hassan Diab.

“Game over”

Protesters again blocked several of the country’s roads on Friday and the military intervened to reopen them. In the evening, dozens of people protested outside the Central Bank.

During an “urgent meeting” of the government, President Michel Aoun announced the establishment of a mechanism to ensure “the injection of dollars into the market by the Bank of Lebanon”, believing that this “should make it possible to gradually lower the exchange rate, “according to his services.

Speaker Nabih Berri spoke of measures to bring the exchange rate below 4,000 pounds for the dollar. Similar announcements were made by the authorities in late May but have had no effect.

The Lebanese pound has traded since Thursday at a historic rate of 5,000 pounds for one dollar, according to money changers, while the rate set by their union is said to be no more than 4,000 pounds.

As of Friday evening, it was trading at less than 4,500 pounds, the source said.

“It is impossible for the dollar or any other currency to jump to this point in a few hours,” said Aoun, citing a “plot”.

Officially, the Lebanese pound has been indexed since 1997 on the greenback at the fixed rate of 1507 pounds for one dollar.

In a Lebanon accustomed to the tensions between parties, observers wonder about the political game behind the scenes.

Salamé is engaged in a new showdown with the government and experts say the powerful armed Shiite Hezbollah movement, which dominates politics, is seeking to oust him.

“Riad Salamé, Game Over”, headlined the daily Al-Akhbar, close to Hezbollah. And supporters of the Shiite movement, usually hostile to the protest, joined the nightly rallies.

“Hezbollah is seeking to change the governor of the Central Bank,” said political scientist Imad Salamey, however, citing the presence of other parties, including civil society, who “are demonstrating to bring down the government.”

“Hunger Revolution”

The governor of the Central Bank was criticized by the demonstrators for financial policies which favored an excessive indebtedness of the state, for the benefit, they say, of politicians and banks.

Banks have provoked public anger after imposing draconian restrictions on dollar withdrawals or foreign transfers in the face of the shortage of green notes.

The current crisis is the most serious since the end of the civil war (1975-1990). Unemployment affects more than 35% of the working population and more than 45% of the population lives below the poverty line, according to the Ministry of Finance.

The authorities are negotiating with the International Monetary Fund (IMF) to release financial aid, on which the country depends to start its economic recovery.

But this aid is conditional on the adoption of reforms long ignored by the authorities.

Triggered on October 17, 2019, the uprising saw some days hundreds of thousands of Lebanese mobilized to denounce the failure of basic services and a deterioration in their living conditions.

“The hunger revolution”, summed up the daily Al-Joumhouria.

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