The Black Market Dollar Won’t Give Up … And Removing The Subsidy Will Increase Demand

The black market dollar closed the week higher, which began late last week, following Mustafa Adib’s apology for forming the Lebanese government.

This was followed by a series of leaks and almost certain information on the intention of the Banque du Liban to lift subsidies on flour, medicines and burns early next year, which generated riots in the black market, and the leak of the dollar exchange rate, and therefore madness in prices and the interruption of some materials in the markets, especially medicines.

The dollar exchange rate was registered on the black market on Sunday between 8,680 and 8,780 Lebanese pounds per dollar.

While the Money Exchange Syndicate announced the exchange price of the US dollar against the Lebanese pound on Saturday and Sunday 3 and 10/04/2020 exclusively, with a moving margin between: buy at 3850 minimum and sell at 3900 maximum.
For his part, the economist Walid Abu Suleiman considered, in an interview with the daily Asharq Al-Awsat, that “after the Central Bank of Lebanon announced that its foreign exchange reserves are decreasing, and that it will not be able after the end of this year. In order to continue supporting basic materials, the search for an alternative mechanism has been started, which may be in the form of a subsidized ration card that will be distributed to citizens or only to the poorest groups, but this card will postpone the problem and will not solve it.

He noted that “what is understood by a ration card is a smart card, on the basis of which citizens receive basic products such as bread, fuel and medicines at a subsidized price, after the Central Bank of Lebanon decided to stop the subsidies. for these goods, and estimates vary on whether Dedicated to the poor or all Lebanese “, explaining that” so far it is not clear, neither the nature of the ration card or who it will include, there is a hint from the Central Bank that this booklet includes all citizens according to their needs of the basic materials from which support will cease, and in case this matter is approved, the bank will have restricted support to the Lebanese people only and has contributed to stop the smuggling of subsidized diesel, thereby reducing the subsidy bill from your reserves.

Abu Suleiman explained that “the central bank can also decide to support only the poor and relies, for example, on the latest World Bank study, which states that the poverty rate in Lebanon is 50%. If the bank decides to start from this study because it is a specialized and neutral source, the cards will be 50%. % Of citizens identify themselves with clear foundations and criteria, and benefit from them to obtain basic products, highlighting that “the adoption of any mechanism for substitution of subsidies must be based on an integrated plan, because the lifting of subsidies will increase the demand for dollars on the black market at about $ 300 million a month ”. This means an increase in the price of the dollar, as well as a decrease in the purchasing power of citizens and an increase in poverty.