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Lebanon: Tenfold Increase in Customs Duties

Lebanon: Tenfold Increase in Customs Duties

Thursday, 24 November, 2022 - 10:45
Lebanon's Central Bank governor Riad Salameh (Reuters)

The Ministry of Finance announced on Wednesday that the government will start collecting customs duties with a tenfold increase, starting the first of December.

The announcement came a day after the Governor of the Banque du Liban said that the official exchange rate of the dollar would be raised to LBP 15,000 as of February.

Minister of Finance in the caretaker government, Youssef Al-Khalil, said that his ministry has sent a letter to Banque du Liban, informing it that it would calculate foreign exchange rates on taxes and fees collected by the Customs Administration on imported goods and merchandise, on the basis of LBP 15,000 pounds per US dollar, as of the first of December.

Khalil noted that this measure would limit the exploitation of price differences, and mitigate the losses incurred by the treasury.

In a televised interview on Monday, BDL Governor Riad Salemeh said: “We are in the process of unifying the exchange rates”.

The BDL bank would have just two rates, he said, the LBP 15,000 and the Sayrafa rate, the official exchange rate platform managed by the Central Bank, where the Lebanese pound is currently trading at about 30,000 to the dollar.

Lebanon’s financial and banking circles were not surprised by the announcement.

In remarks to Asharq Al-Awsat, a senior banking official asserted that the monetary authority’s moves were aimed at covering up the constitutional and political voids on the one hand, and the executive authority’s continued inability to find emergency solutions to stop the series of monetary and financial collapses.

He noted that any move to correct monetary losses caused by the multiplicity of exchange rates would fall within effective approaches to developing a methodology for managing the major monetary and financial crises that the country has been experiencing for three years.

It also contributes, according to a previous assessment by the general manager of the First National Bank, Najib Samaan, to alleviating the burdens and exchange losses incurred by depositors in banks, who carry out withdrawals within monthly ceilings at the rates of LBP 8,000 and 12,000 per one dollar.

In line with this assessment, Salemeh said: “We are trying, through these circulars, to manage the crisis.”

He continued: “This crisis came amid challenges that are beyond the scope of the Banque du Liban… The most important of which was the cessation of paying foreign Lebanese bonds, which largely isolated Lebanon from the financial markets and made it difficult for dollars to enter the country... in addition to the Covid-19 pandemic, which left its marks on the economies of the world as a whole.”

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