Lebanon’s financial system is over, says economy minister

Amin Salam claims little can be done to improve the drastic financial situation

Amin Salam said of Lebanon's ailing currency: 'The financial regime is over. It's done.' AP

The Lebanese Economy Minister on Tuesday admitted his department can do little to stop the country's steep financial decline, as he discussed the decision to make supermarkets display the rate-to-the-dollar at which goods are priced.

Amin Salam said the measure was introduced to guard against rampant price manipulation, as the national currency continues to plummet in value, sometimes by the minute.

Supermarkets will also be permitted to display the price of imported supermarket goods in dollars, with domestic products still priced in the national currency.

Mr Salam said shops must make the move due to the rapid swings in the value of the Lebanese pound which meant some were repricing goods several times each day.

The move will allow for greater transparency in how goods are priced, Mr Salam said, as some supermarkets “are taking advantage of the currency crisis and setting prices on a whim”.

“This way you can go to a supermarket and see the rate products are priced in,” he said.

But he said there was not much the ministry could do about the cost of basic necessities, given the rapid devaluation of the pound to the dollar — once pegged at 1,507 to $1 but now trading at about 87,000.

“If their rate is too high, you have the option of going to a different supermarket and seeing if they have a lower rate,” he said.

The latest measure is not a solution but could at least mitigate some of the effects of the currency fluctuations by regulating prices to prevent profiteering, Mr Salam said.

“It’s not ideal, nor is it what the nation should aspire to. But in the worst of circumstances, now at least this [measure] can protect citizens — even if just by 10 per cent,” he said.

The minister highlighted the lack of solutions to stem the free-falling Lebanese currency and the corresponding economic crisis, which has declined steeply since the first signs of collapse in 2019.

The disintegration has caused national banks to impose informal capital controls that severely limit access to people's money and have rendered the local currency nearly worthless.

Import-reliant Lebanon must now pay for goods and services in US dollars, priced in the American currency then converted into Lebanese lira. Meanwhile, public sector employees and a significant chunk of Lebanese are still paid in lira, with some making the equivalent of $50 a month.

“Our country imports everything,” Mr Salam said, summing up the crux of Lebanon's dilemma.

“There’s no other country in the world that imports more than 90 per cent of its goods. Even our domestic products are made using primary components that are imported … everything is priced on the dollar.

“The financial regime is over. It's done,” he said. “Now we leave the currency to its fate.”