The government continues its patchwork policies to address the financial crisis that the Lebanese citizen endures. The state is searching for temporary solutions to treat the chronic inflation disease that is eating away at the country instead of undergoing a process of excision of this tumor by implementing sustainable financial policies that would free the citizen. After the "massacre" of the salary scale that largely contributed to the current state of affairs, we now face a new version dubbed "social assistance" for public sector employees after their cries for help intensified due to the loss of value of their monthly salary, which has dwindled to a handful of liras counted on fingers.
Will the government's plan curb the dollar's rise and meet employees’ demands, or has it just added fuel to the flames of the financial crisis? Economic expert Professor Jassem Ajaka asserts to "Al-Markazia" that tripling public sector salaries is an inadequate step unless accompanied by essential measures. Thus, there is a possibility that this raise will be nullified by inflation resulting from increasing the cash supply in the market.
Questioning the potential success of this initiative, Ajaka asks: "What is the value of this increase approved by the state for the public sector if the dollar exchange rate increases in the black market? Additionally, can the employee withdraw their full salary from the bank? If the employee decides to use their bank card, will merchants accept it?" Such questions are legitimate for Ajaka, as they represent a looming concern for employees in the forthcoming period, emphasizing that the circumstances accompanying this increase are unclear and unstable, especially since prices continue to rise; a prime example being the price of gasoline which has neared 800,000 lira, placing a tremendous burden on the employee who is obligated to report to work daily and whose salary barely exceeds 7 million lira, along with additional family expenses.
As for the state, based on the International Monetary Fund's demands, it has avoided classifying the increase as part of the salary, asserting that it is of a temporary nature (assistance) for various reasons, the most significant being that it will not be counted as obligations when an employee retires, hence it will not be deducted from the end-of-service fund. Ajaka explains that there is a difference in form between the social assistance approved today and the salary scale, which had an impact when it was approved regarding end-of-service salaries. Moreover, there is a significant difference concerning the salary scale itself, which reached 120 percent and has now increased with the social assistance to about 300 percent.
However, the common element between the two is the absence of funding. The Central Bank of Lebanon initiated the coverage of the deficit resulting from the salary scale when it was approved years ago and might undertake the same step today, despite the state asserting that the funding for the assistance, worth 3.3 trillion lira, will come from customs dollars. Nonetheless, disbursing it one month prior to the enforcement of the customs dollar law generated a loss that the Central Bank will inevitably cover, as it cannot refuse due to Article 91 of the law that grants the government authority over the bank to lend it funds.
In Ajaka's opinion, the solution lies not in patching but in decisive measures that contribute to the stabilization of the Lebanese pound, by halting smuggling to ensure that the dollar cash supply remains intact, preventing the Lebanese pound from being undermined by the black market dollar. Additionally, combating price manipulation by traders, tightening oversight, and taking strict action in this regard are essential. As part of the regulatory measures, it is crucial to stop applications connected to the dollar exchange rate and control the import movement by verifying the destination of funds sent by traders abroad, as there are suspicions regarding the smuggling of dollars abroad under the pretext of importing goods. These four points, Ajaka emphasizes, are critical to maintaining the purchasing power of employees' salaries instead of merely raising them and worsening inflation in the country.
