Key Takeaways:
- The Lebanese Pound (LBP) parallel market exchange rate stabilized around LBP 94,500 per 1 US dollar (USD) in May, aided by Central Bank interventions. Commercial banks operated without significant interruption, enabling regular transactions on the official Central Bank-administered USD-LBP exchange platform, Sayrafa. The parallel market rate and Sayrafa rate were relatively steady throughout April and May, in contrast to March.
- On May 12, the Ministry of Finance increased the customs dollar exchange rate to LBP 86,000 through May 31. While this brought the customs rate closer to the Sayrafa exchange rate, the two were not aligned. Unifying Lebanon’s multiple exchange rates is a key requirement for unlocking International Monetary Fund financial assistance.
- The World Bank published its latest Lebanon Economic Monitor Report, which highlighted multiple economic challenges such as negative GDP growth, current account and export deficits, revenue losses, and dwindling Central Bank reserves. In addition to sharply critiquing Sayrafa policy and the slow pace of implementing reforms, the report also offered an estimation of the size of Lebanon’s cash economy.
- French and German authorities issued arrest warrants for Central Bank Governor Riad Salameh on charges of committing financial crimes. Despite INTERPOL issuing a Red Notice for Salameh’s arrest, he stated that he will not step down as Central Bank governor. The Lebanese judiciary has been tasked by the cabinet with determining whether Salameh should be dismissed from office.
- Public Administration employees called for a two-week strike to begin on May 29, citing mismanagement and deteriorating working conditions. Separately, the Ogero workers union announced that it will go on a two-day strike on June 6 and June 8 due to poor working conditions and station closures caused by fuel shortages. Work stoppages hampered service delivery and telecommunications across Lebanon in early June.
By Crisis Analytics Team, Mercy Corps Lebanon
