The situation of the dollar and the pound in Lebanon … this is how it will be in 2023!

The Lebanese are anticipating the year 2023 with a lot of anxiety and suspicion, and it will bring them to a new peak in the course of a dramatic slump that hasn’t subsided since the fall of 2019, and they are worried about what their living situation will become , after the collapse of the lira at the end of 2022 reached a sensational level, with the exchange rate of one dollar exceeding 46 thousand.

Observers are wondering about the fate of the negotiations with the International Monetary Fund to obtain an aid program of between 3 and 4 billion dollars, at a time when its conditions have not been fully implemented, and it is a matter that is getting more complicated with the presidential vacancy following the end of former President Michel Aoun’s mandate and the inability of parliament to legislate and tighten borders. The powers of the caretaker government, as well as the exacerbation of political differences and conflicts between stakeholders over how to get out of the crisis.

In parallel, the year 2023 will see the end of the mandate of the Governor of the Banque du Liban, Riad Salameh, in May, to end a reign that has continued to be extended uninterruptedly for 33 years.

What are the most important economic and financial challenges that Lebanon will face in 2023?

Former Economy Minister Raed Khoury Khoury believes that in the course of 2023 the economic and financial challenges will complete from the autumn of 2019 and will worsen in the absence of the vision of the state and the depletion of what remains of the central reserve, which has dropped over 3 years from $33 billion to less than $10 billion today.

In turn, the economist Ali Noureddine refutes the challenges of the year with several advantages, in particular:

– How will Lebanon complete the terms of the personnel agreement with the International Monetary Fund, before moving to the final agreement, and if Lebanon does not fully implement the conditions (this) it means that the agreement will not be completed this year.

Khoury believes that the central bank does not have the magic wand to solve the lira crisis and that the state’s inability to implement radical reforms means its continued collapse without limits or ceilings against the dollar.

And he adds: “Nothing suggests that the lira is taking a different path, accusing the central bank of what it calls “arbitrary circulars”, wrong interventions on the black market and the failure of an exchange platform to control the money market.

Khoury believes that the corrective path for the lira begins with the reorganization of the financial sector and the restructuring of the public debt.

What are the challenges banks will face in 2023?

Khoury says banks have historically been the levers of the economy in Lebanon, and today they complain of a systematic beating of their existence and role. And he refuses to restructure the banks in the current proposed formula, “because it will lead to the cancellation of deposits, while their recovery must go through the state”.

However, Noureddine notes that the banks’ challenge is the crisis of accumulated losses in the sector, which the government has estimated at about $73 billion, which is the difference in the consequences of the sector for hard currency depositors and cash and liquid assets that it possesses, and this gap is the core of its crisis.

He says tackling it is through a comprehensive restructuring of the sector, zeroing out losses, distributing them fairly, prioritizing how deposits are handled, and determining the fate of funds that have fled overseas after the fall of 2019. This assumes that “the categories of more deserving losses will begin to be charged by the owners of illegal enrichment” and tax evaders.

(Al Jazeera Network)