Lebanese pound drops to new low of 15,150 per dollar

Politicians have been bickering over the formation of a new government since October

A man counts Lebanese pounds at a currency exchange shop in Beirut, Lebanon October 1, 2020. Picture taken October 1, 2020. REUTERS/Mohamed Azakir

Lebanon’s national currency plunged to a record low on Sunday while shortages in fuel and medicine intensified as the political and economic crisis engulfing the country since late 2019 deepened.

The Lebanese pound has since lost over 90 per cent of its value, trading at a market rate of 15,150 to the US dollar on Sunday as opposed to the official 1515 rate.

The Central Bank, which has $15 billion US dollars in foreign currencies left, has been rationing its subsidies of vital imports at the official rate, leading to shortages in fuel, medicine and gasoline.

The caretaker government, on the other hand, is struggling to put in place a plan to replace subsidies that have drained the country’s foreign reserves and fuelled smuggling to neighbouring Syria with financial aid to low-income families.

Lebanon has been without a fully functioning Cabinet since the massive Beirut port explosion that killed over 200 people and destroyed thousands of properties last August, compounding the economic and financial crisis.

Nine months later, the country has yet to form a government that enacts reforms in exchange for international financial aid as President Michel Aoun and Prime Minister-designate Saad Hariri remain at loggerheads over the Cabinet’s makeup and reform agenda.

The worsening liquidity crisis has led to acute supply shortages that have forced pharmacies to close shop since Friday while motorists have been queuing at petrol stations for hours to fill up their tanks.

Pharmacies will end their strike on Monday but many will soon be forced out of business if subsidies aren't lifted, one pharmacist told The National.

“We are short on most medication because suppliers are refusing to deliver orders pending financing from the central bank or a decision to lift subsidies so they can deliver orders at the market rate,” Mrs Rania, who declined to give her first name, said.

“Can you believe that I had to ask my expat sister to bring me my personal medication from abroad when she visits Lebanon,” the pharmacy owner complained.

The delivery of gasoline supplies should resume on Monday after the Central Bank’s approval to finance new shipments, George Brax, a member of the Syndicate of Gas Stations, said on Sunday.

“I urge the Ministry of Economy, with the assistance of security services, to ensure delivered quantities are emptied… into stations,” Mr Brax said.

The long queues at petrol stations have left many ordinary Lebanese frustrated and angry.

"That's it, I'm not going to spend my day trying to fill my car's tank. If the queues persist, I'm cancelling my appointments," the owner of a cleaning services company told The National in Beirut.

Diesel shortages also threatened to disrupt entire industries after private generator operators were forced to ration power supply to by up to five hours per day, following in the footsteps of Electricity du Liban, the state-owned company, which has been providing only around six hours of electricity per day in many areas of the country.

The increased power rationing has led to disruptions in water supplies to households as several state-affiliated water establishments announced last week that their pumps were being shut down due to a lack of diesel to power backup generators.

Sustained power outages could soon also cause “disastrous” large-scale internet outages in Lebanon that could cripple entire industries and vital infrastructure, the head of state-owned telecoms operator Ogero said.

In a bid to help Lebanon avert a power blackout, Iraq has agreed to provide Lebanon with an annual 1 million tons of crude oil to power up its electricity plants.

The oil deal, however, has yet to be finalised pending the conclusion of talks over financial technicalities, a spokesperson for the Lebanese Energy Ministry said.

EDITOR'S PICKS
NEWSLETTERS