The Lebanese pound has lost 96% of its value since the start of the crisis. (Credit: Joao Sousa)
BEIRUT — The Lebanese lira hit a record low Friday night, trading at LL40,000 to the dollar on the parallel market.
This new record comes just days before the anniversary of the Oct. 17, 2019 protests that sparked thawra ("revolution")— mass anti-government demonstrations that spread throughout Lebanon.
In early July, the Institute of International Finance (IFI) predicted the lira would continue its depreciation until it reached "LL40,000 against the dollar by the end of the year." The IFI also predicted the lira will be trading at LL110,000 to the dollar by 2026.
Bank of America (BofA) predicted as early as July 2020 in a report that the dollar/pound rate "could reach more than LL46,000 to the dollar" by the end of 2020.
Two years later, this ominous prediction looks close at hand, given the political class's inability to implement the necessary reforms to revive the country's economy. In April, a preliminary agreement was reached with the International Monetary Fund (IMF) to provide Lebanon with a financial aid package of $3 billion over four years, on the condition of crucial reforms.
The lira so far has lost 96 percent of its value since 2019, causing at least 80 percent of Lebanese residents to fall below the poverty line, according to the United Nations Economic and Social Commission for Western Asia.
The World Bank also anticipated a 6.5 percent contraction of Lebanon's GDP last May. The institution is expected to update its projections after its fall meetings with the IMF but did not issue any numerical projection for Lebanon in its latest report on the Middle East and North Africa.
The IMF, whose managing director Kristalina Georgieva called on Thursday for Lebanese officials to "put their country and their people first." The Fund stopped providing estimates on Lebanon's GDP in 2021, given the continued uncertainty of the situation.