A view of the Beirut port prior to the Aug. 4, 2020 port explosion. (Credit: Joseph Barrak/AFP)
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A new, and unexpected, “customs dollar” rate comes into force today, the Finance Ministry confirmed to L’Orient-Le Jour. Following a joint decision by caretaker Finance Minister Youssef Khalil and Banque du Liban Governor Riad Salameh, the exchange rate used to calculate customs duties — or the so-called “customs dollar” — on imports has been raised from the LL15,000 to the US dollar in force since Dec. 1 to LL45,000. Describing news of the rate change as “totally unexpected” and “very bad,” Nicolas Chammas, president of the Beirut Traders Association, said “We feel that the [traders] have been left out of the loop by this decision adopted even though the state budget for 2023 has not gone beyond the stage of the draft.” The president of the union of food importers, Hani Bohsali, meanwhile cautioned that “we do not know how the market will react to this measure.”
Caretaker Economy Minister Amin Salam is scheduled to conduct an inspection of supermarkets today “to verify that they are applying the new dollar pricing properly.” The first day of implementation of a new measure allowing supermarkets to display prices in dollars coincides with a new record low for the lira on the parallel market. The dollarization will apply only to products that are imported or charged to supermarkets in dollars by suppliers — the prices of locally produced cigarettes, bread, fruits,vegetables and other products will still be displayed in lira. Payment in lira hinges on the exchange rate chosen by the supermarket, which must be visibly and prominently communicated to customers. “Until now, consumers had no control over the displayed prices and no transparency on the applied rates,” Salam told L’Orient Today, having previously claimed that the measure aims to offer transparency to shoppers. The ministry will not impose an exchange rate on supermarkets, intending to “create competition between supermarkets to keep the most competitive rate,” Salam added.
Municipal police officers barged into a bank in Sour, South Lebanon to demand their previous months’ salaries at the Sayrafa rate as banks opened for a second day after a prolonged strike. According to one participant in the action, the Sour municipal police officers’ incursion lasted mere minutes after which they were mollified by “promises” from the SBGL branch to fulfill their request for February and March salaries — telling the officers that “the problem lies at the central bank” instead. Meanwhile, across the country, “some banks welcomed customers directly, while others continued to operate on appointment,” a bank source told L’Orient Today, explaining this weeks’ suspension to banks’ open-ended strike — a timeframe overlapping with when public employees are expected to retrieve their salaries. Public employees retain the right to convert sums of lira to dollars at the Sayrafa rate, or almost half the parallel market rate, under the provisions of central bank circular No. 161 — an operation no longer accorded to private sector depositors, three banking sources told L’Orient Today. “Banks are waiting for a decisive reaction” from the judiciary to end their strike, a banking source told L’Orient Today, almost a month after the protest began. The judicial pressure contested by the Association of Banks in Lebanon at the outset of the strike — following a ruling allowing continued proceedings against Fransabank by depositors demanding their funds in dollars — intensified during the past month after Mount Lebanon Court of Cassation Public Prosecutor Ghada Aoun accused Bank Audi and SGBL of money laundering.
The price of a domestic gas cylinder breached the LL1 million mark yesterday as the lira fell to a record low of LL88,500 to the dollar on the parallel market, boosting the prices of fuel and generator subscriptions. The Energy Ministry issued two updates to fuel prices yesterday in an attempt to keep up with the lira’s parallel market volatility, increasing diesel and gasoline prices during the first and second update by more than LL70,000 and LL50,000, respectively. Gas stations have previously closed their pumps during periods of heavy parallel market exchange rate fluctuations, while fuel sellers demanded the dollarization of fuel prices to buttress against exchange rate-related losses. Adopting an average price of fuel, in lira, more than double the one used the previous month, the Energy Ministry also increased the tariff private generator operators can charge per kilowatt hour (kWh) by 40.9 percent in lira — the price remained almost the same in dollars. The updated tariffs come amid a boost to state electricity availability from barely one hour per day to two to three hours, expected to reduce reliance on generators.
Banque du Liban governor Riad Salameh will soon face prosecution in Lebanon, a judicial source told L’Orient Today, amid mounting legal pressure against the central bank chief from foreign judiciary. The upcoming prosecution aims to preserve “the rights of the state and the Lebanese" from the risk of losing assets that were allegedly embezzled in Lebanon, a senior Lebanese judicial source told L'Orient Today. On Monday, the Swiss financial regulator announced that it had launched proceedings against two Lebanese banks in an investigation into the alleged embezzlement of hundreds of millions of dollars from the sale of BDL assets — suspected to have been siphoned through Forry Associates Ltd., an offshore company owned by Salameh’s brother Raja. Salameh is being investigated by at least five European countries, in the course of which a delegation visited Lebanon and left announcing they would return to question the central bank chief. The domestic case against Salameh gained traction after the appointment of a new lead investigator after months of delay, with charges of money laundering, embezzlement and illicit enrichment leveled on Feb. 23 against Salameh, his brother Raja and one of his assistants.
In case you missed it, here’s our must-read article from yesterday: “Berri wants to ride the wave of rapprochement between Riyadh and Damascus”
Compiled by Abbas Mahfouz