Xinhua News Agency, Beirut, February 16 Newsletter: The local currency has plummeted, and the people’s livelihood in Lebanon is difficult
Xinhua News Agency reporter Liu Zongya
Entering February, although the temperature in Beirut rarely falls below 10 degrees Celsius, staying in a room with no power and no heating still feels chilly.
When the reporter first took office at the end of 2020, the small residential building where the branch is located rarely had power outages. Although the municipal power supply time was short, eight households in the building shared a diesel generator and shared the costs. However, as the economic crisis in Lebanon deepens, the domestic currency continues to depreciate, the government stops fuel subsidies, and oil prices continue to soar, the neighbors can only negotiate to cut the power supply time by half to save fuel and money.
Lebanon has implemented a fixed exchange rate policy of linking the Lebanese pound to the U.S. dollar since 1997, and the official exchange rate has been maintained at about 1,500 to 1. Since the Lebanese banking crisis in September 2019, the black market exchange rate of the Lebanese pound against the US dollar has fallen by more than 90%, and the official exchange rate is useless. Starting from February 1 this year, Lebanon will adjust the official exchange rate to 15,000 Lebanese pounds to 1 US dollar. At the same time, the black market exchange rate of the Lebanese pound to the US dollar has fallen below 60,000 to 1.
Lebanon implements a dual currency system. In addition to the Lebanese pound, the US dollar is also in circulation. The form of remuneration is different for different jobs, some are all paid in Li pound or US dollars, and some are paid in US dollars. As the black market exchange rate of the Lebanese pound against the U.S. dollar continued to plummet, the family life with only the Lebanese pound in the income structure was unsustainable. Fortunately, Lebanese expats continue to repatriate US dollars to help relatives and friends in China. According to statistics, remittances from Lebanon will exceed US$6 billion in 2022.
Khalil Saifuddin, who is nearly seventy years old, is a local journalist who works in foreign media and earns more than US$1,000 a month in royalties. Saifuddin told reporters that his son is a doctor and his daughter is a pharmacist. The family used to live together, but affected by the economic crisis, his son’s clinic was in poor condition and he was forced to practice in Saudi Arabia. Qatar for a living. Now that the family is scattered in three countries, it is difficult to reunite, which is regrettable.
Due to the soaring exchange rate against the Lebanese pound, the US dollar has become popular in Lebanon, and some suppliers in industries including cable TV and energy now only accept US dollars.
According to the Lebanese National News Agency, Amin Salam, Minister of Economics and Trade of the Lebanese caretaker government recently decided that Lebanese supermarkets can price food in US dollars, which was opposed by the chairman of the Lebanese Federation of Trade Unions, Beshara Asmar. The latter stated that the dollarization of food prices was “illegal” and the citizens could not afford it, and the trade union refused to accept this decision.
Local Lebanese media previously quoted the latest World Bank research report saying that Lebanon’s food price inflation rate ranks among the highest in the world, second only to Zimbabwe and Venezuela. According to data from the Lebanese Central Bureau of Statistics, the country’s inflation rate will exceed 170% in 2022, and hyperinflation has lasted for more than a year.
In addition to Lebanon, some Arab countries have also suffered from plummeting currencies and soaring prices in recent years.
Adnan Bourji, a Lebanese political analyst, told Xinhua that the Arab region has abundant natural resources and a superior geographical location, but many Arab countries are experiencing economic crisis, increasing poverty and out-of-control inflation. He believes that this has a lot to do with blindly following the Western economic model and being manipulated by Western countries.
Bourji said that the West interfered in the internal affairs of some Arab countries and forced them to implement policies that conform to the interests of the West, which has caused these countries to fall into a debt crisis. If Lebanon and other Arab countries want to get out of their economic difficulties, they must get rid of their dependence on the West and learn from the successful development experience of some emerging economies.