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The Lebanese Pound (LBP) depreciated to a low of LBP 63,500 per USD 1 on January 26. Acute LBP depreciation in the second half of January was accompanied by an increase in LBP money supply and Central Bank-mandated limits on Sayrafa platform transactions to individuals – excluding firms and organizations – and a LBP 100 million conversion ceiling per individual. Despite a change in the Sayrafa rate at the end of January to 42,000, the divergence between the parallel market exchange rate and Sayrafa rate widened significantly.
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The Central Bank issued multiple circulars in January to account for a change in the official LBP exchange rate. The circulars enable USD account holders to withdraw up to USD 400 a month, with an annual limit of USD 4,800, and withdraw LBP from their USD-denominated accounts at the new rate of LBP 15,000. The Central Bank also updated regulations on repaying foreign currency loans.
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Fuel prices surged across the country as the pound depreciated, triggering protests and road closures. At the end of January, prices stood at LBP 1,082,000 for 95-octane, LBP 1,107,000 for 98-octane, LBP 1,118,000 for diesel, and LBP 685,000 for gas. Record-high prices place an additional burden on individuals and households, particularly transportation and electricity costs.
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A delegation of European investigative judges arrived in Lebanon on January 16 as part of a cross-border probe into an alleged money laundering scheme involving Central Bank Governor Riad Salameh. The delegation heard testimony from Central Bank officials and employees at commercial banks.
- Public sector employees resumed their strike in response to a decrease in the purchasing power of their salaries and a lack of additional financial support. Public school teachers began a week-long strike on January 7, over the deteriorating purchasing power of their salaries and a lack of government assistance. Ministry of Telecommunications employees went on a strike on January 17, in response to currency and price instability endangering the value of their salaries.
- Investigative Judge Tarek Bitar resumed work on a probe into the 2020 Beirut Port blast by releasing five individuals held in connection with the investigation, and charged others in relation to the blast, including Public Prosecutor Ghassan Owaidat. Days later, Owaidat filed charges against Bitar and ordered the release of detainees held in connection with the blast investigation. The flurry of judicial moves leave the eventual fate of the probe in doubt.
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Lebanon’s 2022 import data was released in early January, showing an import bill that was surprisingly large relative to the country’s estimated GDP. This reflects an economy struggling to improve its balance of payments in the face of negative coping mechanisms and perverse incentives, a bad sign for recovery and stabilization.
By Crisis Analytics Team, Mercy Corps Lebanon
