Lebanon is facing an unprecedented economic crisis and the local currency has already lost about 60% of its value. The central bank’s policies have come under fire while citizens are protesting how the government handles the economic meltdown which led to people’s living situation deteriorating “terrifyingly.”
Lebanon’s Currency Crisis
Protests erupted in Lebanon on Friday over the government’s handling of the unprecedented economic crisis that has tanked the local Lebanese currency, devastated people’s savings, and sent prices and inflation skyrocketing. This is the country’s worst economic crisis in decades.
The Lebanese government imposed a nationwide lockdown in March after the coronavirus outbreak. At present, 737 covid-19 cases and 25 deaths have been confirmed in the country of 6.8 million people. The lockdown has led to economic collapse with soaring unemployment and business closures. Prices of basic goods have massively inflated, in some cases by over 60%. A market trader in the city of Saida told Arab News that “the living situation had deteriorated terrifyingly,” adding that “Prices of goods have doubled, people are reluctant to buy, and their purchases are limited to essentials.” One of the protesters, Nada Nasif, told The Media Line:
Our financial crisis began before the corona crisis, which then caused prices to jump. People lost their jobs and the unemployment rate has reached the highest level ever.
The Lebanese pound, pegged to the U.S. dollar for 30 years, has lost about 60% of its value against the dollar so far. The two currencies have been used interchangeably in Lebanon and many people have kept their savings in dollars, which previously could be freely withdrawn from banks. However, withdrawing dollars is now prohibited due to capital controls that have been in place for the past six months. As the pound plunged in value, banks began restricting dollar withdrawals. Then, the central bank said that withdrawals could only be in the local currency at “a market exchange rate” to be determined by banks, Al Jazeera reported. The Lebanese call this policy “plain robbery.”