Key Takeaways:
- The Lebanese Pound (LBP) depreciated in April to 27000, likely due to an increase in LBP in circulation and reduced Sayrafa injections. This possibly marks a shift in the Central Bank policy since January of stabilizing the LBP within the 20-25000 range, and Lebanon will likely experience further depreciation in the coming months.
- Lebanon is on the verge of holding parliamentary elections on May 15, the first since the onset of the economic crisis. Depending on the results, in the period following the election Lebanon may experience delays in government formation and a potential presidential vacuum, which in turn will have significant consequences not only for Lebanon’s ability to enact policy decisions and reforms that will determine the trajectory of the economic recovery in the coming years, with significant ramifications for both needs and the operations of aid actors.
- Despite signing a staff-level agreement with the International Monetary Fund (IMF) on April 7, the economic and financial recovery plan – which outlines the government’s plans to implement requested IMF reforms – is facing opposition from the banking sector. Pushback from the Association of Banks in Lebanon and deadlock around other reforms could delay the process and hinder Lebanon’s chances of signing a full agreement that would unlock further muchneeded funds.
- Lebanon continues to experience the impact of the war in Ukraine, with the prices of food and fuel showing further volatility during April. This trend is expected to continue, especially if the LBP loses more of its value against the US dollar in the coming months. The increase in fuel prices in Lebanon continues to have a negative impact on the people and households with an analysis of Facebook mobility data showing a significant negative correlation between petrol prices (octane 95) and level of mobility.
- The migration disaster in Tripoli highlights the impact the economic crisis in Lebanon is having on residents. Similar accidents are to be expected in future, as increasing numbers of Lebanese, Syrians and Palestinians see migration as the only option to address endemic crises and poor livelihood opportunities.
By Crisis Analytics Team, Mercy Corps Lebanon
