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Lebanon: Govt Seen Backtracking from FX Move

Lebanese pound banknotes are pictured at a currency exchange shop in Beirut, Lebanon, January 5, 2022. REUTERS/Mohamed Azakir
Lebanese pound banknotes are pictured at a currency exchange shop in Beirut, Lebanon, January 5, 2022. REUTERS/Mohamed Azakir
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Lebanon: Govt Seen Backtracking from FX Move

Lebanese pound banknotes are pictured at a currency exchange shop in Beirut, Lebanon, January 5, 2022. REUTERS/Mohamed Azakir
Lebanese pound banknotes are pictured at a currency exchange shop in Beirut, Lebanon, January 5, 2022. REUTERS/Mohamed Azakir

The Lebanese finance ministry seemed on Thursday backing away from a Nov. 1 start date to slash the official exchange rate.

The ministry said on Wednesday the official exchange rate of 1,507 pounds per dollar would be replaced with one of 15,000, calling this a step towards unifying multiple rates that have emerged during Lebanon's three-year long financial crisis.

But after declaring a Nov. 1 implementation date, the ministry later linked the step to approval of a financial recovery plan, the latest version of which is being discussed in parliament.

Some economists and politicians saw this as a government retreat: the recovery plan, which must address a $72 billion hole in the national finances, has been in dispute since 2019.

The pound's market value currently stands at 38,000 to the dollar, a devaluation of more than 95% since Lebanon collapsed into a financial crisis that has plunged swathes of the population into poverty.

Finance Minister Youssef Khalil could not be reached for comment. In a Reuters interview on Wednesday, he said the change was agreed with the central bank and would be discussed with stakeholders over the next month before implementation.

Ibrahim Kanaan, a senior lawmaker in President Michel Aoun's Free Patriotic Movement, told Reuters amending the official rate was necessary "but not in this way".

"I want to check if he will follow through on this or has to amend it a bit, because you cant do it this way," he said.

A finance ministry official referred Reuters to a statement late on Wednesday that said the move to a new official exchange rate was "conditioned on the approval of the recovery plan that is being worked on, and which should accompany that step".

Central bank governor Riad Salameh, in a text message to Reuters late on Wednesday, said implementing the decision "will require time", without elaborating.

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China Has ‘Very Big’ Policy Room to Spur Growth, Central Bank Adviser Says 

A man walks past office buildings at the central business district in Beijing on March 17, 2025. (AFP) 
A man walks past office buildings at the central business district in Beijing on March 17, 2025. (AFP) 
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China Has ‘Very Big’ Policy Room to Spur Growth, Central Bank Adviser Says 

A man walks past office buildings at the central business district in Beijing on March 17, 2025. (AFP) 
A man walks past office buildings at the central business district in Beijing on March 17, 2025. (AFP) 

China wields significant policy room to stimulate its economy this year while some reform was needed to boost consumption, Huang Yiping, an advisor to China's central bank and a professor at Peking University, said on Wednesday.

China has unveiled fresh fiscal measures, including a rise in its annual budget deficit, to help hit an economic growth target of around 5% this year, which analysts have described as ambitious. The central bank has pledged to cut interest rates and pump more money into the economy at an appropriate time.

"There is still very big space in terms of macro policies," Huang told Reuters on the sidelines of the annual Boao forum.

Macro policies will help tackle cyclical problems, while some structural challenges could be resolved in the future, he said.

Some reform measures, including those to increase people's incomes and confidence, are needed to boost consumption, on top of recent moves unveiled by the government, Huang said.

Peng Sen, chairman of the China Society of Economic Reform, told the Boao Forum on Tuesday that China should take steps to boost consumption as a share of gross domestic product to 70% by 2035 from around 55% currently, narrowing the gap with developed nations.

Wider structural reforms include changes in institutional frameworks, income distribution, and fiscal and taxation systems will be needed to help boost spending, Peng said.

The Boao Forum, an international summit seen as Asia's version of the World Economic Forum in Davos, Switzerland, is being held in China's Hainan province from Tuesday through Friday.

Policymakers have put expanding domestic demand, especially consumption, as the top priority this year as they try to cushion the impact of the Trump administration's tariffs on its crucial export engine.

Huang also told the forum that globalization, which has benefited many Asian economies, could be reversed.

"Many of the most successful economies in the last half century or more, like East Asian economies - China and so on -all benefited from globalization, but there is certainly a risk that the US-led globalization may be reversed," Huang said.