Lebanon's finance minister urged the banks on Friday to cut interest rates and also tried to reassure savers that their deposits would not be touched as the country wrestles with a financial crisis. The reasons for the depreciation of the local currency relative to the US dollar are actually multiple. But quick reforms were demanded by the United States, the European Union and others in return of maintaining their financial support. Even Patriarch Bechara Boutros Al-Rai, the country’s senior Christian cleric and leader of the Lebanese Maronite Church, stepped in by indirectly criticising the insistence of Shia political forces in the country in choosing a Shia figure for finance minister, which represents the main reason for Adib’s failure to create a new coalition government. All public records are available online at the following link: OnBase document system. Al-Hariri’s Future Movement, the strongly anti-Hizbullah Christian Lebanese Forces Party, and Jumblatt’s Progressive Socialist Party did not join this government, however, and Diab’s coalition faced strong opposition from the Gulf countries and the United States, mainly because it enjoyed the support of Hizbullah. The statement cited ABL chairman Salim Sfeir as saying the meeting “was very positive”. Following the Beirut explosion, many countries offered their financial backing to Lebanon. All quotes delayed a minimum of 15 minutes. Sarah El-Richani, a professor of mass communications at the American University in Cairo, referred to the regional context, specifically the recent US sanctions on Hizbullah figures and companies linked to it. “It appears that some did not understand or did not want to understand that the French initiative is the last opportunity to save Lebanon and to prevent its disappearance, as the [French] foreign minister said clearly,” Jumblatt tweeted. Finance Minister Ghazi Wazni called on the Association of Banks in Lebanon (ABL) to reduce interest rates “in the coming period in order to spur economic activity and ease the burden on public finances”, his office said in a statement issued after the minister met with the association. Dr Samih Azar, professor, Faculty of Business Administration and Economics, Haigazian University, Beirut, told Arabian Business that the excess supply of currency in circulation has caused an excess demand for the US dollar in the alternative spot market and the depreciation of the Lebanese pound. He resigned as prime minister in October 2019 amid protests against all the country’s political forces due to the deterioration in social and economic conditions in Lebanon. Lebanon's Finance Ministry no one's exclusive right: Former PM He added that the refusal to rotate key ministries was sabotaging the last chance to save Lebanon and the Lebanese people Former Lebanese Prime Minister Saad Hariri speaks at the presidential palace in Baabda, Lebanon August 31, 2020. Money exchangers on the black market were buying the dollar for around LBP8,300 on Friday.
Hizbullah and Aoun backed Hassan Diab, who was in power when August’s port blast in Beirut took place, as the country’s new prime minister at the head of a coalition government in December 2019. Analysts said the central bank is not printing money as a result of an increase in gold and foreign currency reserves, but to cover the debts of banks and treasury. Printing more Lebanese pounds when the reserves of foreign currencies (especially the US dollar) are depleted also means that the value of the pound will continue to drop in the face of these currencies, analysts told Arabian Business, adding that it will have a direct impact on the local market and prices will soar as a result.
All Rights Reserved, Fast food giant McDonald's vows to stay in Lebanon as a plethora of big international brands exit amid growing economic crisis, Goldman Sachs warns of further economic turmoil if new government isn't formed soon.
Lebanon’s finance dilemma Disagreements over who will lead the Finance Ministry in Lebanon have complicated talks on forming a new government Bassem Aly , Tuesday 22 Sep 2020 “This occurred in July, when I measured the monthly inflation rate at over 50 per cent per month for 30 consecutive days. BEIRUT (Reuters) - Lebanon’s finance minister urged the banks on Friday to cut interest rates and also tried to reassure savers that their deposits would not be touched as the country wrestles with a financial crisis. If, for instance, the Shia ministers in the government were handpicked by Hizbullah and Amal to constitute with other allies at least a one-third stake in the government including major ministries, then the choice for the Finance Ministry would no longer be so crucial. Preview: Zamalek can't afford to stumble as second-place race intensifies, France accuses Turkey of 'military involvement' in Karabakh, Kuwaiti emir names top security official as crown prince, France to hold aid conference for Lebanon in November : Minister, Iran's Rouhani slams sending fighters to Nagorno-Karabakh, Palestinian hunger striker said to be in critical condition, Tokyo Olympics organisers say will cut costs by $280m, Africa roundup: Coach Halilhodzic hails Morocco recruits, Libya says it detains men suspected of burning Nigerian to death, EU's tussle over climate change ambition heats up after Parliament vote, Film Review - Saheb Al-Maqam: Cursed by the saints, Trump stimulus turnaround bolsters US stocks. To do this, a new finance minister must embrace and install a currency board system,” Hanke said. The Iran-backed, Shia Hizbullah groups has a grip on southern Lebanon, and the politico-security implications of the blast—though resulting in no casualties so far—are yet to be seen, especially after further details about it are revealed. “In what capacity does a sect demand a certain ministry as if it were its own and obstruct the formation of the government until it achieves its goals and so causes political paralysis,” Al-Rai demanded.
The printing process as a solution to the liquidity crisis in the treasury came at the expense of the Lebanese pound, and everyone who receives their salary in the local currency, be it in the private or public sector, they added. He noted that the Taif Agreement, which ended the country’s civil war in 1990, did not stipulate that specific ministers should be members of specific sects. The central bank printed LBP13 trillion in 50,000 and 100,000 bills last autumn. "First, they revolve around the increased political uncertainties leading to a gradual loss of confidence.
Berri refused to join Adib’s government due to “domestic problems”.
The Beirut explosions left 200 people dead, 6,000 injured, and 300,000 homeless, and came against the background of the country’s long-running rubbish crisis, continuous power cuts, and increases in the prices of basic goods. "The exchange value of the Lebanese pound doesn’t depend only on the actual currency in circulation, but should be adjusted to dwindling currency demand. The excess volume of Lebanese currency in circulation over the past months has been alarming and is causing inflation to spiral out of control amid rising demand for US dollars and other foreign currencies, financial analysts have told Arabian Business. Easing the pressure on Hizbullah and Iran would probably see the resolution of the impasse in Lebanon,” El-Richani explained. Jumblatt believes that French President Emmanuel Macron’s initiative for Lebanon, involving returning to talks with the International Monetary Fund (IMF) over new financial packages in return for a new government, could be the “last opportunity” for the economically-suffering state. “Alternatively, the prime minister may need to provide assurances whereby any appointed non-Shia minister of finance would consult and guarantee the tacit approval of Shia ministers or the Shia speaker of parliament in signing legislation or decrees. Why the Big Mac could offer hope as big brands exit Lebanon, Lebanon's foreign currency reserves could vanish in 12 months, Arabian Business: why we're going behind a paywall, UAE's Mubadala confirms $844m stake deal in retail unit of Indian giant Reliance, Rolls-Royce mulls financing plan after ruling out Kuwait investment, UAE construction giant Arabtec reportedly to be placed into liquidation, Credit Suisse to cut jobs in Gulf in wealth management overhaul, Saudi Arabia extends coronavirus stimulus package but narrows scope.
The excess volume of Lebanese currency in circulation over the past months has been alarming and is causing inflation to spiral out of control amid rising demand for US dollars and other foreign currencies, financial analysts have told Arabian Business.
The Lebanese crisis is linked to severely deteriorating social and economic conditions. Political and religious figures in Lebanon issued statements this week reflecting the difficulties the country is experiencing in forming a new government.
Then there is the significant creation of money in the Lebanese pound with the currency in circulation almost doubling on an annual basis amid large fiscal deficits with direct monetisation on behalf of the Central Bank.
Reporting by Eric Knecht and Ellen Francis; editing by Ghaida Ghantous and Gareth Jones. The associated skyrocketing inflation hit a record 120 percent by the end of August. See here for a complete list of exchanges and delays. The outgoing economy minister, Mansour Bteish, said this month that Lebanon must bring interest rates down drastically as a first step toward rescuing its economy. Oct 05, 2020 Lebanon News Woes of Beirut rescuers 'microcosm' of troubled Lebanon Oct 05, 2020 Local Pound at LL8,700 to the dollar as political vacuum drags Oct 05, 2020 International US stocks rise in pre-market amid Trump COVID-19 uncertainty Shia political forces, mainly Hezbollah and Amal Movement, insist on choosing a Shia figure for finance minister, which is oposed by many of the country's politicians and religious figures. The central bank told commercial banks in December to cap their interest rates on deposits in foreign currencies at 5% and to cap the rate on Lebanese pound deposits at 8.5%. The only website dedicated to finance news on Lebanon, who is managed by the team of Lebanon Opportunities. ", © 2020 ITP Media Group. “It [the United States] is also pressuring France and other European countries to deem it a terrorist organisation.
Hence, I think the sticking point remains of whether the March 8 camp that controls the parliamentary majority will accept a government dominated by a parliamentary minority while being backed by France and the Western states,” Salamey said. Responsibilities The Finance Department is responsible for managing all the financial affairs and all public records for the City of Lebanon.
Steve Hanke, a professor of economics at Johns Hopkins University in the US, said that the “epicentre” of Lebanon’s economic crisis was a currency crisis that “has spawned the first hyperinflation that’s ever been experienced in the Middle East region.”.
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