Lebanon to Soon Beat Zimbabwe in Highest Inflation Rate

A Lebanese woman looks at merchandise priced in US dollars in a major supermarket in Beirut. (AP)
A Lebanese woman looks at merchandise priced in US dollars in a major supermarket in Beirut. (AP)
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Lebanon to Soon Beat Zimbabwe in Highest Inflation Rate

A Lebanese woman looks at merchandise priced in US dollars in a major supermarket in Beirut. (AP)
A Lebanese woman looks at merchandise priced in US dollars in a major supermarket in Beirut. (AP)

A recent move by Lebanon’s Central Bank (BDL) to offer to sell the cash dollar through its platform at the rate of LBP 70,000 has temporarily curbed the rapid collapse of the national currency.

The price margins of cash trading in the parallel markets fell to around LBP 80,000 per dollar, after touching the barrier of LBP 100,000 only minutes before the BDL decision was issued on Wednesday night.

Government services and fees, which are collected based on the BDL Sayrafa platform, increased overnight by about 55 percent, especially public electricity and communications bills.

Many factors converge in Lebanon’s consumption markets, signaling unprecedented rises in inflation levels, which could put the country ahead of Zimbabwe, in terms of high food prices in particular, and the cost of living in general.

Asharq Al-Awsat monitored the activity of banks, which have reprogrammed their information networks to comply with the new decision of the Central Bank and to issue the necessary instructions to branch managers and employees.

However, it was noticed that many of them deliberately set special standards that impose compliance with the requirements of “Know Your Customer” and determine the source of liquidity in Lebanese pounds, to avoid exportation through currency exchange operations with money changers.

Experts and analysts agree that the cumulative inflation index, which doubled from about 990 to 2,200 percent last year, will not require more than half of the time period, i.e. the middle of the current year, to achieve a new double jump, unless positive internal developments occur.

Those are particularly related to the election of a president of the republic, the formation of a new government, and the issuance of a package of laws for an agreement with the International Monetary Fund (IMF), which is conducting a new field assessment through a team that will visit Beirut next week.

Market traders and dealers told Asharq Al-Awsat that the 9 percent increase in prices, which was recorded at the end of the first month of 2023, is nothing more than the tip of the inflation iceberg, under which gloomy indicators lurk. Some of the data are likely to appear at the end of the first quarter, they remarked.

The continuous collapse of the Lebanese pound is inevitably reflected in prices, primarily those of food commodities and fuels, followed by basic expenditures, such as the supply of electricity from private generators, transportation, water and other daily life necessities.

At the same time, the Ministry of Finance began collecting customs duties according to the updated pricing, which is based on calculating the dollar at a price of LBP 45,000, which is equivalent to three times the price adjusted a few months ago, i.e. LBP 15,000 per dollar.

Preliminary estimates point to automatic increases, ranging between 5 and 15 percent, on the prices of goods subject to customs duties, with the exception of food commodities, medicine, medical supplies, and other basic materials.

Estimates also suggest that the government, under pressure to meet wage increases, allowances, and aid for about 330,000 public sector employees, will resort to additional adjustments in calculating the costs of public services and fees, to become closer to the price of the black market.

In fact, private educational and hospital institutions and telecommunications companies resorted to pricing the services in “fresh” dollars, partially or completely. This was seen in the unprecedented rise in telecommunications prices by 331 percent during the second half of 2022.

Similarly, the cost of health services (medicine, hospitalization and medicines) increased by 176 percent. Education costs have also augmented by more than 191 percent, bearing in mind that social and health benefits have shrunk to minimum levels, as health coverage available from public funds now ranges between 5 and 20 percent of the real cost incurred by employees in the public and private sectors.



US Defers Removal of Some Lebanese, Citing Israel-Hezbollah Tensions

Smoke billows from a site targeted by Lebanon's Hezbollah, along the northern Israeli border with Lebanon on July 25, 2024, amid ongoing cross-border clashes between Israeli troops and Hezbollah fighters. (AFP)
Smoke billows from a site targeted by Lebanon's Hezbollah, along the northern Israeli border with Lebanon on July 25, 2024, amid ongoing cross-border clashes between Israeli troops and Hezbollah fighters. (AFP)
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US Defers Removal of Some Lebanese, Citing Israel-Hezbollah Tensions

Smoke billows from a site targeted by Lebanon's Hezbollah, along the northern Israeli border with Lebanon on July 25, 2024, amid ongoing cross-border clashes between Israeli troops and Hezbollah fighters. (AFP)
Smoke billows from a site targeted by Lebanon's Hezbollah, along the northern Israeli border with Lebanon on July 25, 2024, amid ongoing cross-border clashes between Israeli troops and Hezbollah fighters. (AFP)

The United States is deferring the removal of certain Lebanese citizens from the country, President Joe Biden said on Friday, citing humanitarian conditions in southern Lebanon amid tensions between Israel and Hezbollah.

The deferred designation, which lasts 18 months, allows Lebanese citizens to remain in the country with the right to work, according to a memorandum Biden sent to the Department of Homeland Security.

"Humanitarian conditions in southern Lebanon have significantly deteriorated due to tensions between Hezbollah and Israel," Biden said in the memo.

"While I remain focused on de-escalating the situation and improving humanitarian conditions, many civilians remain in danger; therefore, I am directing the deferral of removal of certain Lebanese nationals who are present in the United States."

Israel and Iran-backed Hezbollah have been trading fire since Hezbollah announced a "support front" with Palestinians shortly after its ally Hamas attacked southern Israeli border communities on Oct. 7, triggering Israel's military assault in Gaza.

The fighting in Lebanon has killed more than 100 civilians and more than 300 Hezbollah fighters, according to a Reuters tally, and led to levels of destruction in Lebanese border towns and villages not seen since the 2006 Israel-Lebanon war.

On the Israeli side, 10 Israeli civilians, a foreign agricultural worker and 20 Israeli soldiers have been killed. Tens of thousands have been evacuated from both sides of the border.