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The administration of the National Social Security Fund claims that it has taken the initiative to preserve the purchasing power of severance payments by asking the Bank of Lebanon to calculate the compensation at an exchange rate equivalent to £ 3,900 after converting them from pounds to dollars at an exchange rate of 1520 pounds per dollar. This means that the Banque du Liban will create cash and pump it into the market, with the result that it will help inflate prices rather than protect your purchasing power. The additional inflation will consume more compensation value. It would have been better for the Insurance Department to agree to buy an inflation insurance policy to protect the compensation portfolio, as former Labor Minister Camille Abu Suleiman suggested, or to resort to solutions other than those that contribute to the collapse.
The Department of Insurance relies on its claim in terms of compensation protection on the basis that the funds that the Banque du Liban will create will cover part of the erosion in the real value of these compensations, given that the amount returned to the holder of the compensation will double and a half. For example, a compensation worth one million pounds, under the new mechanism, will amount to 2.5 million pounds.
The compensation holder can benefit from this mechanism on the basis that “kohl is sweeter than blindness”, but it will actually be “melted”, because the additional amount he received from the mechanism comes from the creation of cash. This mechanism directly fuels price inflation, and thus the additional quantity becomes a factor in price inflation and the erosion of more compensation payments to their owners. The guarantee pays more than 1 billion Syrian pounds in workers ‘compensation annually, and these figures are likely to rise further in light of the rise in arbitrary exchange cases and the workers’ need for money to cover their costs of lifetime. In this sense, the Banque du Liban will have to increase the amounts of money it injects into the market by an additional 1,500 billion pounds, at a monthly rate of 125 billion pounds.
Currently, the Central Bank pumps around 1,300 million pounds a month to cover deposits, and this amount is expected to increase if it is decided to move from the mechanism to support the import of goods from the use of mandatory reserves to the mechanism for targeting families giving them money in pounds in their accounts. By calculating the value of the sums it will pump out to cover compensation, the monthly rate of money creation will increase to 1.425 billion pounds.
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Source: News
