- Karen Tarabay
- BBC correspondent – Beirut
Talk about the prices of commodities in Lebanon, especially foodstuffs, has turned into a subject of continuous astonishment. Every day, a steady rise in prices, shocking consumers, until the surprise became as if it was a misplaced feeling, with the inability to keep pace with the price change with the rise in the exchange rate of the dollar.
To relieve the burden of supermarket employees, the Ministry of Economy decided, at the request of merchants and shopkeepers, to price goods in dollars.
In his justification for the decision, Minister of Economy Amin Salam said that it would lead to the adoption of greater transparency in the pricing of goods, indicating that the Lebanese cannot be left to randomness and lack of management and know-how.
It would be very simple had it not been for the fact that the overwhelming majority of the country gets paid in Lebanese pounds.
The scene will be as follows: when someone goes to buy a box of labneh from a Lebanese store, the price could be, for example, four dollars. He can choose to pay in dollars or in Lebanese pounds, according to the exchange rate of the pound against the dollar at the moment of payment.
The problem is that the exchange rate changes several times per day, and therefore the price of a packet of labneh in Lebanese pounds can change from moment to moment, while it remains fixed at four dollars, for those who choose to pay in green currency.
In fact, this procedure perpetuates the recognition of the Lebanese economy’s addiction to the dollar. Rather, it gives this addiction a new legitimacy.
It is also an acknowledgment that there is no plan on the horizon to establish stability for the exchange rate of the lira against the dollar, and therefore it is expected that the price of the dollar will continue to fluctuate, in most cases, in the foreseeable future.
The adoption of the dollar for pricing can also be considered as additional evidence of the extent to which the economic model is separated from living policies.
image copyright EPA
customs dollar
Another decision reinforces these conclusions. Overnight, surprisingly and without any declared financial logic, the caretaker prime minister, Najib Mikati, agreed to triple the value of the so-called customs dollar.
It is necessary to explain the meaning of the “customs dollar”, which is considered one of the terms of the financial crisis and its consequences, and one of the exchange rates of the dollar against the Lebanese pound approved in the country.
“Customs dollar” refers to the rate used to calculate the customs tax for imported goods, with the exception of foodstuffs.
The value of this dollar increased from 15 thousand Lebanese pounds to 45 thousand pounds, which will automatically affect the prices of a very large number of commodities.
This recent rise was preceded by a first rise in the value of the customs dollar, from 1,500 Lebanese pounds to 15,000 pounds last December.
However, that rise was preceded by weeks of public opinion preparation in the media. This time, none of this happened, as if there is normalization with the idea of the continuous rise in the value of everything, and the constant expectation that everything that is in Lebanese pounds is subject to the logic of doubling at any time and without any ceiling.
Actually, what is happening in the country can be described as a vicious circle.
Months ago, the exchange value of the customs dollar was raised to secure additional income for the state, which increased the wages of public sector employees.
However, the continuous decline in the value of the lira soon nibbled at the size of that increase, so the state returned to increasing the value of the customs dollar threefold to secure additional income for its treasury, which may be used to reconsider wages that erode with the depreciation of the lira. and so on.
This is what happens when dealing with one of the largest financial and economic crises in the world, with painkillers only.
