In light of the discussions in the Parliament’s Finance and Budget Committee for the 2024 budget, attention is drawn to the budget figures because they do not specify a unified exchange rate, which creates a problem in calculating revenues or expenditures.
Therefore, according to economic researcher Dr. Mahmoud Jebaei, attention is directed to the 2024 budget to find out the official exchange rate that the budget will adopt, which seems unclear because the budget sometimes relies on the phrase “official rate,” sometimes “exchange rate,” and at other times “the rate determined by the Bank of Lebanon” in its revenues and expenditures. Therefore, Jabaei demands, “Those concerned with setting a unified price for the dollar in the budget because it is unreasonable, after all this period of collapses in the exchange rate, to increase the diversity of prices, especially since today’s exchange rate is close to the exchange rate in the parallel market.”
He believes that “it is illogical to continue with the exchange rate at 15 thousand, so Dr. Jabaei asks: How can we rely on the exchange rate at 15 thousand liras, while all the state’s revenues and taxes are at 85,500 and above?”
He confirms that “if the Lebanese government adopts the price of 85,500 as the official price, this will allow depositors to obtain their dollars at this price, because Circular 151 is legally canceled because the Central Council of the Bank of Lebanon, in one of its sessions at the end of 2022, had voted unanimously to adopt the law’s price of 151.” It is the same as the official dollar price, in other words, the 151 was canceled and depositors were linked to the official dollar.”
However, Dr. Jabaei “warns of a very important matter in this area: if $85,500 is approved, it is not possible to give depositors all of their very large funds at this price because that will lead to the collapse of the monetary supply in the lira, which will raise financial inflation again to very high rates in lira terms.” This inevitably affects the exchange rate of the dollar on the black market, which means that the collapse will return dramatically if this matter is adopted without restrictions, controls, or prior study.”
If the banks give depositors large sums of money in Lebanese pounds, it will lead to a collapse in this block, which is what the Bank of Lebanon has been fighting essentially since the beginning of 2023, and the new ruler has continued it by controlling the monetary block in pounds to control the exchange rate to prevent the exchange rate from slipping away.
On the other hand, he points out that “neither the Lebanese banks nor the Bank of Lebanon can insure the needs of the Lebanese pound on these amounts because that will inevitably lead to printing large numbers of the pound, which is not possible or acceptable and is rejected by the Central Bank and economists because it will negatively affect, once again, the value of the pound.” lira”.
Jabaei believes, “The ideal solution is to determine a specific quota to be withdrawn on this amount that is compatible with the pure mass present in the market today.”
He points out that “this matter should be coordinated between the Ministry of Finance and the Bank of Lebanon, or through Capital Control in the Council, which determines the withdrawals and the mechanism of withdrawals in this framework.”
Jabaei considers that, “This matter, despite setting a quota, is better for the depositor to take his dollars in a specific manner than to take them on 15,000, while the dollar on the black market is 90,000, and all taxes and fees are on 85,000, and it means canceling the fees on deposits.”
Jabaei does not forget, “holding the state responsible by paying its debts to the Central Bank in order to return depositors’ money.”
2023-11-17 12:07:52
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