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US$ at LL 3200 raises food prices by 110%
28-5-2020
The Banque du Liban governor, Riad Salameh, issued a circular yesterday to amend facilities the BDL could provide to commercial banks to support imports of food products and industrial raw material. According to the circular, banks can request from BDL to secure 90% of the value of imported raw material in foreign currency to meet the import needs of business enterprises at a total of USD 100 million or its equivalent in other foreign currencies (https://bit.ly/2M46pIO). Noting, that BDL’s intervention came in response to the difficulties the food import sector has been facing as a result of shortage in dollar liquidity, which caused a prohibitive surge in product prices reaching nearly 300%, according to Saadeddine Hamidi Sakr of the General Labor Union, Al Diyar reported. For its part, Al Akhbar daily wrote, the new BDL circular indicates that the exchange rate will be determined according to the mechanism stipulated by the provisions of Article 7 of the Basic Decision No. 7548 involving financing imports. It sets the rate of cash exchange in foreign currency at LL 3200. With this, Al Akhbar went on to say, the decision becomes the first official text supporting the rise in prices of basic food commodities, and thus undermining the purchasing power of Lebanese consumers as it will results in raising prices by a minimum of 110%. At the same time, it helps merchants reconfigure and rebuild their capital from the pockets of the Lebanese twice, once from the depositors’ money confiscated by the banks and the BDL, and another from the wage earners. Furthermore, Saqr mentioned that he met with economy minister this week to discuss the provision of dollars for the importation of basic goods within a set ceiling and exchange rate, and that he received a pledge to secure the dollar at a rate of LL 3200. Saqr pointed out, however, that the BDL mechanism shall not resolve the dilemma, as the food basket targeted by the BDL circular does not include canned food, vegetables, fruits, chocolate, etc. (Al Akhbar, Al Diyar, An Nahar, May 21, 22, 23, 28, 2020)
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