Key Takeaways:
- Despite fluctuating throughout June, the Lebanese pound’s (LBP) value against the US Dollar (USD) did not sharply depreciate due to the Central Bank’s ongoing intervention via Circular 161. However, this period of relative stability is threatened by the precarious state of Lebanon’s economy and a sharp USD 500 million dip in foreign exchange reserves recorded in the first two weeks of June alone.
- Queues returned to gas stations as rumors circulated that fuel subsidies will be lifted. Fuel prices reached record highs in June, with an LBP 75,000 increase in the prices of 95- and 98-octane between the end of May and late June, while the price of diesel increased by LBP 173,000 during the same period.
- Queues formed in front of bakeries across Lebanon in June, primarily due to the Central Bank not providing timely credit lines for importers to bring in needed supplies and the state’s inability to find alternative grain markets to those in Ukraine and Russia.
- Caretaker Prime Minister Najib Mikati was named to form a new government but faces a host of challenges in gaining support for his cabinet lineup. Mikati already proposed a new government, with most of the ministers from the caretaker government remaining in place. The delay is largely due to disagreements between Mikati and President Michel Aoun over the appointment of specific ministers, in particular who will be named to head the Ministry of Energy and Water.
- Some 15,000 public administration employees went on strike during June, closing down most public administration offices. Despite multiple proposals to increase salaries and provide other benefits, the employees remain on strike, demanding better work and living conditions.
- Lebanon, Syria, and Egypt signed a gas import agreement but many challenges remain before imports can arrive in Lebanon including pipeline repairs, alleviating concerns that parties to the deal will be sanctioned in line with the US-imposed Caesar Act, and securing a World Bank loan.
- LCAT’s own quantitative analysis shows that depreciation has a large impact on the consumer price index (CPI) for food and non-alcoholic beverages and can be used to project the CPI with a high level of accuracy. The LCAT will develop these projections in future work.
- Air pollution decreased in Lebanon over the past year and a half, most likely because of lower levels of automobile traffic due to higher fuel prices.
- Further analysis by LCAT found that diesel generator emissions are mostly responsible for NO2 pollution in Lebanon.
- The relationship between diesel prices, electricity consumption, and the total change in electricity consumption, is a potentially useful tool for identifying economically vulnerable households in Lebanon.
By Crisis Analytics Team, Mercy Corps Lebanon
