Meeting held at Grand Serail to address ongoing collapse of Lira

Lebanon Economy
2023-02-17 | 08:41
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Meeting held at Grand Serail to address ongoing collapse of Lira
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3min
Meeting held at Grand Serail to address ongoing collapse of Lira

The solutions for addressing the increase in the dollar exchange rate relative to the Lebanese lira are relatively limited if they even exist at all.

Caretaker Prime Minister Najib Mikati gathered on Thursday those involved in the financial and economic files with the governor of the Banque du Liban Riyad Salameh and its Central Council in light of the dramatic fall of the lira.

Mikati's primary concern was to stop the skyrocketing rise of the dollar's exchange rate to defuse the rising anger in the streets. He asked Salameh about what might be done in this regard, and the latter responded that no work could be done because banks were shut down due to their conflict with the judiciary.

Specific alternatives and treatments can be put out as soon as banks open their doors, but their impact won't be profound.

The Serail meeting didn't provide any concrete solutions; instead, it was limited to generalizations and a few ideas from here and there. The issue of the strike of public employees was brought up during the discussion, especially since the continued closure of the public sector prevents the Treasury from receiving funds.

While the Association of Banks in Lebanon is focused on the judiciary and its accusations, Mikati will try to convince it to reopen.

What concerns the ABL is that heads of boards of directors of some banks have been accused of money laundering. In its opinion, this is a serious accusation that could damage their remaining international reputation and lead correspondent banks to stop doing business with them, which would prevent credit openings for imports. Herein lies the biggest problem.

What can be done should banks start working again is nothing but temporary solutions that halt the national currency's sharp decline and slow it down a bit. Given the state's low earnings, might the BDL be compelled to print additional local currency to pay employees and cover other expenses?

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