A woman leaves a bakery with a bag of bread as people wait their turn in the neighborhood of Nabaa on Aug. 13, amid a wave of shortages of basic items due to a severe economic crisis. (Credit: Anwar Amro/AFP)
Want to get the Financial News Roundup by email? Click here to sign up.
There is no such thing as a summer lull in Lebanon. A central banker on the run, a bishop arrested for allegedly dealing with the enemy, and fraudulent bakeries dealing with subsidized wheat. All straight out of a Coppola movie.
There were also two important breakthroughs on the International Monetary Fund front in the past week. First the Finance and Budget Committee finished reviewing the government’s proposed amendments to the banking secrecy law and added some of its own suggestions.
The draft law will be voted on by the full Parliament on Tuesday. Karim Daher, chair of the fiscal and financial policies committee of the Lebanese Association for Taxpayers' Rights, said during a talk on Friday that it is important to watch out for any changes to the final draft that will be circulated to MPs. Ibrahim Kanaan, chair of the Finance and Budget Committee, stated last week that some last-minute amendments suggested by the central bank were not discussed by the committee, but that they will be sent alongside the approved draft law to the Parliament. This is bound to create some confusion tomorrow.
Second, the Finance Minister has finally provided the Finance and Budget Committee with the previously missing information detailing the multiple exchange rates used in the preparation of the 2022 budget. This development means that the committee should finish reviewing the budget in the coming weeks before it is finally approved by Parliament.
In addition to amendments to banking secrecy, MPs will vote Tuesday on several laws, including the election of seven MPs to the Supreme Council. The council, which is authorized to prosecute members of Parliament and ministers, is made up of 15 members, seven of whom are MPs, and eight judges. The elections of MPs to the Supreme Council are of particular interest to those concerned with the Aug. 4, 2020, port blast file and its investigation.
They are also set to approve a loan of $150 million from the World Bank to Lebanon to finance its wheat imports. The move comes on the back of recent bread shortages and accusations that subsidized wheat is being hoarded or smuggled to Syria.
Many questions about the loan remain unanswered. For instance, MP Fadi Alameh (Amal Movement/Baabda) asked, “How is Lebanon going to pay back the loan?” and MP Salim Sayegh (Kataeb/Kesrouan) queried, “Which party in Lebanon will benefit from the difference in the dollar rate?” given that the Lebanese government will record the loan on its books at the official rate of LL1507.5 to the dollar while the parallel market rate is trading around LL30,000.
Also on the agenda is a law amending the fees and charges levied by the Lebanese government on airline operators. The current fee structure is still based on the official peg of LL1507.5 to the US dollar. For example, flight operators are charging passengers $33 in fresh dollars while paying the government LL50,000 — less than $2 at the parallel market rate — leading to a loss of revenue. The change in fee pricing would allow the government to generate hundreds of millions of fresh dollars.
Someone once told me, in Lebanon, we will never run out of committees, we have committees on committees. We are happy to announce that caretaker Economy Minister Amin Salam announced on Friday a new committee to police bread production and the distribution of subsidized wheat. We rejoice at the news.
The latest report on consumer prices issued by the Central Administration of Statistics showed that inflation has continued to rise at triple digits in Lebanon. Prices increased 210.08 percent from June 2021 to June 2022.
In the latest episode of “catch me if you can” (h/t Tala Ramadan), Mount Lebanon Public Prosecutor Judge Ghada Aoun narrowly missed Banque du Liban governor Riad Salameh when she entered Banque du Liban’s headquarters in Hamra along with members of State Security.
My sources tell me he is hiding in the basement, in the gold vault.
Good news-bad news of the week, Lebanon’s national men’s basketball team made it to the finals of the 2022 FIBA Asia Cup, before narrowly losing to Australia, the defending champion. Lebanon beat the Philippines 95 to 80, New Zealand 86 to 72, India 104 to 63, China 72 to 69, Jordan 86 to 85 before losing to Australia 73 to 75.
Until next week.