Amid the economic collapse that Lebanon has been experiencing for three years, a large proportion of Lebanese people now live below the poverty line and are unable to meet their basic needs. After three years of financial and political deterioration, the primary concern of citizens has become tracking critical circulars issued by the Central Bank of Lebanon, which significantly impact their living standards, either negatively or positively. Since the announcement of selling the US dollar at 70,000 L.L., people are asking whether there is a way out of the cyclical crisis plaguing the banking sector.
Public sector employees are in a predicament and are taking escalatory steps to improve their salaries. Conversations with Elias, a surveillance officer in state security, reveal much suffering that exceeds expectations. He recounts to “Werdna” about his worsening psychological state with every fluctuation in exchange rates, considering the treatment of public sector employees unacceptable and unethical. He questions, "Who controls the daily exchange rate? How long will the dollar continue to rise in this insane manner?" Elias asserts that "all decisions currently issued by the Central Bank do not bode well," as his salary, which was equivalent to 150 dollars before the latest circular, is now close to 90 dollars at the Sayrafa rate. He concluded, "The cry will inevitably rise if we do not see swift steps to ensure even minimal financial stability."
An Economic Expert Explains...
In his discussion with "Werdna," economic expert Patrick Mardini stated that "when an employee withdraws their salary at the Sayrafa rate of 45,000 and the dollar on the black market is roughly 80,000 L.L., this means they have received the equivalent of two salaries." He pointed out that the Central Bank’s decision will take effect this month, while next week, public sector employees will receive their salaries based on a Sayrafa rate of 70,000, which reduces their benefits. Mardini continued, "When the Central Bank was injecting dollars at an exchange rate of 70,000 while the black market rate was 80,000, it lost around 10 to 15%. However, if it had remained at 45,000, it would have lost about 50%." Thus, the aim of raising the Sayrafa exchange rate is to reduce the loss margin, knowing that as soon as the Central Bank stops injecting dollars at the Sayrafa rate, the dollar will rise again.
Regarding where to begin the restructuring of the banking sector, Mardini confirmed that it should start by distributing the remaining dollars in the Central Bank to depositors.
Who Benefits from These Decisions?
Economist Munir Younes stated that, as of now, it is unclear who benefits from this decision amid the evident confusion in market activity and withdrawals. He believes the solution will only come from unifying the exchange rate, starting with a set of reforms demanded by the International Monetary Fund, which includes restructuring banks, distributing losses (reallocating deposits), and controlling transfers and withdrawals (capital controls), especially since the effects of the Sayrafa platform have become very limited, merely postponing the huge leaps in the dollar's price. In contrast, this would waste the remaining reserves at the Central Bank and lead discussions around disposing of gold reserves, marking a critical phase the country could reach.
