Lebanese Cabinet to meet after pound drops to record low

Currency was trading at 30,000 to 1 US dollar on the black market

A man counts Lebanese pounds at an exchange shop in Beirut. The currency hit a new low on Tuesday. Photo: AP

Lebanon's Cabinet is expected to meet within days to potentially end a standoff that has crippled the government as it faces a financial crisis.

Prime Minister Najib Mikati said he will call for a Cabinet meeting on Wednesday morning after holding talks with President Michel Aoun.

"We will convene Cabinet as soon as it receives the budget," he said.

Ministers have not met since October 12 because of a dispute over the investigation into the 2020 Beirut port blast.

Approval of the 2022 budget by Cabinet and parliament has been a main demand of the International Monetary Fund amid talks for a support programme regarded as vital to Lebanon's economic recovery, Mr Mikati said.

"I think that (the Cabinet's) agenda and the presence of the budget makes it more than necessary for Cabinet to meet, and I don't think anyone will fall short on their national (duties)," he said.

The parliament's Amal movement, the Iran-backed Hezbollah group, refused to allow the Cabinet to meet since early October. It wants the removal of a judge investigating the port explosion.

Mr Mikati has said the executive branch has no say in the matter.

It comes as the pound hit a new low on Tuesday, reaching 20 times its value on the black market since the economic meltdown began in late 2019 and likely throwing more people into poverty.

Lebanon's pound was trading at 30,000 to 1 US dollar on the black market as the economic crisis continues with no solution expected in the near future.

The Lebanese currency was pegged at 1,500 pounds to the dollar for 22 years until decades of corruption and mismanagement led to the country’s worst economic crisis in its modern history starting in October 2019.

This currency crash was made worse by a political crisis over the investigation into the August 2020 explosion at Beirut’s port.

The World Bank has described Lebanon’s economic meltdown as one of the worst seen since the 1850s.

Many people are unable to buy basic goods as salaries have not been adjusted for inflation.

The small country of six million, including a million Syrian refugees, imports 80 per cent of its goods.

More than three quarters of people living in Lebanon live in poverty, the UN reported.

Mr Mikati said last month said last month he expects a draft deal to salvage the country's economy to be reached with the International Monetary Fund before the end of February.

Updated: January 5th 2022, 9:36 AM