| 7 December 2023, Thursday |

BDL in crisis management: Lebanon faces short-term solutions for state funding

Governmental sources have indicated that immediate solutions for state funding, mainly securing salaries and wages, may be available in the short term while utilizing the remaining Special Drawing Rights (SDR).

Potential treasury revenues in dollars, estimated at around 35 percent of the total budget of about $2 billion, could offer some relief.

However, these sources expressed concerns over the prolonged duration of the crisis.

According to the sources, the absence of a president for the republic could lead to halting dollar-denominated salary support, as the gap between market rates and the Sayrafa exchange rate remains around LBP 4,000.

To address this issue, the government might consider increasing this gap in local currency, contingent on maintaining the current exchange rate stability.

Furthermore, the state could collect dollars from the market through customs fees in dollars for a specific amount of time, provided that certain legal amendments are made.

The sources revealed that there are dollar-denominated consequences that cannot be disregarded, including the repayment of loans to international institutions and financial funds, as well as funding for critical medications and partial financing for wheat imports.

On the other hand, there has been no communication yet between the Finance Ministry and the Acting Governor of the Banque du Liban (BDL), Wassim Mansouri, and the deputy governors.

Sources from the Finance Ministry stated that some ideas are under discussion, and Minister Youssef Khalil might meet with them in the upcoming days.

These developments are unfolding amidst the realities conveyed to officials in various state administrations, indicating that the BDL will not retract its decision to reject any dollar withdrawals from compulsory reserves. The government is urged to address its situation accordingly.

As the crisis continues, Lebanon grapples with the urgent need for viable funding solutions, and policymakers face the challenge of navigating complex economic circumstances. The uncertain political landscape further complicates the search for sustainable remedies to overcome the financial crisis.

  • LBCI