A man counts banknotes at a shop in Beirut. (Credit: Reuters)
BEIRUT — The Lebanese lira slid to below LL25,000 to the US dollar Tuesday, shedding more than 5 percent since the announcement of the preliminary deal with the International Monetary Fund last week.
Here’s what we know:
• The preliminary deal between the Lebanese government and the IMF was announced last Thursday. The fund disclosed it is earmarking $3 billion over 46 months to assist Lebanon in dealing with its multiple crises.
• The IMF provided in its press release a detailed action plan listing all the reforms required from the Lebanese government to unlock the assistance. The reforms should be implemented prior to receiving money.
• The deal also remains subject to the IMF’s management and executive board.
• The Lebanese government so far has not shared any details about its economic recovery plan, and most importantly details about the distribution of the financial sector losses and the potential impact on depositors.
• According to several banks and customers contacted by L’Orient Today, the Sayrafa platform and by extension Circular 161 are losing their efficacy as dollars are being sold selectively to few clients. The difference between the parallel market rate and the Sayrafa rate continues to widen, currently at LL3,000, the last time the difference reached this level was in mid January when the central bank announced it will start selling US dollars in unlimited amounts.
• Parliament’s Finance and Budget Committee and Administration and Law Committee are meeting tomorrow to discuss the capital control law. Policy experts expect the law to be voted on before the elections.
• The Finance and Budget Committee met again today to continue with the discussion of the 2022 budget. Ibrahim Kanaan, chair of the committee, asked the government to meet to discuss the exchange rate used in the calculation of the revenues and expenditures. According to Kanaan, this is the most challenging issue in the budget.
• Kanaan also asked the government to separate the tax articles from the budget and send them as a separate draft law with a clear explanation of the financial and social impact.
• The cabinet is meeting Thursday with the following financial items on its agenda; Approving a draft law to amend the banking secrecy law and approving the use of its Special Drawing Rights. The SDRs will be used to pay for wheat imports, extending a loan to Electricity du Liban to pay for general maintenance, paying the dues to regional and international funds, and paying for medications.
• In mid-day trading the US dollar to lira crossed the LL25,000 level. Last time the lira breached LL25,000 was on March 24, when banks were just ending their two-day “warning strike” aimed at pressuring the government into protecting the sector from mounting legal pressures and fuel distributors were already threatening to start their own.