Monetary stabilization, fiscal absorption, and energy pricing in Lebanon

Jamal Ibrahim Haidar is the chairperson of the Department of Economics at the Lebanese American University.Lebanon’s exchange rate stabilization at around LL90,000 per U.S. dollar has generated cautious optimism after a severe monetary crisis. Following a period of exchange rate volatility, inflationary acceleration, and institutional uncertainty, the relative stability of the Lebanese Lira’s exchange rate since late 2023 has been interpreted as evidence that the economy has approached a new nominal stability. Yet from a macroeconomic perspective, a question remains insufficiently examined: does the current exchange rate genuinely reflect improvements in Lebanon’s underlying monetary and fiscal conditions, or is it instead the outcome of a broader liquidity management strategy operating through indirect fiscal channels ?A careful look...