Beirut– The Lebanese Ghazi Al-Adhami accompanies his wife Hoda inside a branch of a supermarket chain, testing for the first time the experience of shopping for the monthly home supplies, after commodity and food stores began pricing in dollars instead of pounds (the local currency) in implementation of a decision issued by the Ministry of Economy, and it entered into force since the beginning of March / This March.
The citizen expresses his impression of the new pricing mechanism by shaking his head desperately, and tells Al-Jazeera Net, “They are working on dollarization of all goods and services as a result of the destruction of the lira and our monetary sovereignty. As for us, it makes no difference to us, whether they are priced in dollars or lira, and when we buy a small group of our monthly food needs, Its price is equal to my salary, from which I used to live with my family in the past, in sufficiency and prosperity.”
Al-Adhami – a retired university professor who served in education for more than 3 decades – is considered a model of the heads of families that formed the backbone of the middle class, until the financial economic crisis overthrew them, and while his salary was estimated at about 4 thousand dollars, its value does not exceed today with some incentives. 500 dollars.
The citizen pulls his cart, while his wife carefully chooses the family’s needs after checking the quality and prices, and she added, “The crisis forced us to bargain with the quality of the goods, and sometimes we reduce the quantity in favor of the quality, and yet we come out with a huge bill in proportion to our salary.”
Store concern
On a tour of the shelves of some large stores whose workers continue to change the price stickers to become in dollars, one might think for a moment that the prices are low, because some small commodities are priced at less than $3, but converting prices into the national currency reveals the horror of inflation and imaginary numbers.
For example, someone who leaves the store carrying a few items of grain, cheese, some meat, canned food, and cleaning powders, at a value of $50, may seem normal and logical, but it amounts to about 4 million pounds, which represents the salary of an employee in the public sector.
In the grain and canned section, citizen Sally – a mother of 3 children – checks the dollar prices attached, then opens the calculator application to calculate its value in lira. She holds a kilo of rice and says to Al-Jazeera Net, “When I saw that its price was two dollars, I found it appropriate, but I calculated its cost in lira, so I was shocked. It’s 160,000.”
Sally – who is the wife of an employee in a private institution – complains about their daily suffering, and says, “Our expenses to provide the basics and pay the monthly bills are very expensive, and if you want to buy supplies for the month with the same quality and quantity as before the crisis, we will need about 20 million pounds.”
On the other hand, most of the small shops in residential neighborhoods still rely on pricing in pounds, and are gradually moving towards pricing in dollars, while citizens express their fear of strengthening pricing fraud, especially since the dollar exchange rate fluctuates around the clock, up and down.
“They calculated my bill on the exchange rate of 90,000 dollars, while it fell in hours on the black market to 80,000,” Majd says, upon leaving a small store in Beirut. He wonders, “Who will protect us from the greed of merchants and fraud by pricing foodstuffs?”
The decision to price retail stores in dollars coincided with two circulars by the Central Bank of Lebanon, which exacerbated confusion and turmoil in the markets.
And after the dollar crossed the threshold of 90,000 pounds, the governor of the Central Bank, Riad Salameh, announced that he would intervene as a seller of cash dollars at a price of 70,000 pounds, starting from March 2, 2023, and thus raised the exchange rate of an exchange platform from 45,000 to 70,000 dollars, which means raising Paying electricity and telecom bills, etc.
While many describe the central circulars as temporary and unsustainable, the Ministry of Finance raised the price of the customs dollar from 15,000 to 45,000 pounds, or a 3-fold rate, which exacerbates pressure on commodity prices for a country that imports more than 90% of its needs.
dollar pricing wallpapers
And while the pressures on people’s consumption in the markets combine, and in light of the record high levels of inflation, the Minister of Economy, Amin Salam, previously explained the pricing decision by saying that it would allow the consumer to pay in dollars or according to the black market exchange rate.
The minister specified 4 additional conditions for pricing operations:
- The need to put price stickers in dollars on the shelf or on the commodity.
- Placing the approved exchange rate for the dollar on the shelves and at the payment boxes.
- The exchange rate, on the basis of which the purchase of the dollar was paid, depends on the condition that it does not exceed the prevailing price in the market at the time of purchase by the consumer.
- Include in the invoice the total value of purchases and the value added tax in pounds, with the date and time of purchase and the approved exchange rate.
The Director General of the Ministry of Economy, Muhammad Abu Haidar, told Al Jarirah.net that the state took this decision “unwillingly” as a result of the repercussions of the deterioration of the exchange rate of the lira.
He added, “We decided to adopt the dollar as a reference for pricing the commodity, and this does not mean a detraction from our monetary sovereignty. Rather, the citizen is able to know the real price of the commodity in dollars in order to protect him from manipulation of the lira,” and stresses that the authorities will continue to impose control over pricing operations.
“Dollarization” and conflicting opinions
Experts believe that Lebanon is heading towards comprehensive “dollarization”, at the expense of dealing in its local currency, historically, and while the country relied pivotally and mainly on the dollar as investment capital and for saving savings, and a category of bank deposits, however, since the outbreak of the crisis in the fall of 2019, it has become successively resolved. The place of the lira in daily cash transactions and in conducting commercial transactions.
The head of the Syndicate of Food Commodities Importers, Hani Bohsali, considers that the dollar pricing system has more positives than negatives in the Lebanese case, as it protects the consumer from manipulation, as well as the merchants’ capital, as there are about 190 branches of large “supermarket” institutions in Lebanon, and about 20 thousand A commercial store, and the state of confusion with pricing operations continues, expecting everyone to price in dollars as an inevitable option.
For his part, the academic and economist Sami Nader considers that there is a delay in all measures that curb the collapse, as the dollarization system should have been adopted to stop the printing of the currency, which exacerbated inflation at the expense of the consumer and in favor of merchants, speculators and networks smuggling goods between Lebanon and Syria.
And all that the monetary and political authority did, according to Nader, was random support policies that melted the central reserve, which before the crisis was $34 billion, and today it is less than $10 billion. However, this economist finds that pricing in dollars may not eliminate the speculative operations that the state is unable to control, “rather, it has established it as a stand-alone system for managing the economy.”
Nader considers that the real crisis is by raising the price of the customs dollar to 45 thousand, which will open the door for smuggling wide if many evade paying customs duties to enhance their profits, and he says that the most affected are all the Lebanese who receive their salaries in pounds, especially since inflation and the collapse were not accompanied by A radical correction of incomes whose value has been eroded by more than 70%.
The World Bank previously classified the Lebanese crisis among the worst in the world, at a time when the lira lost more than 95% of its value.
Here, Nada Nehme, Vice-President of the Consumer Protection Association in Lebanon, says that the study of the consumption index, for about 145 basic commodities, revealed that their prices have increased cumulatively by 1,500% in pounds.
Nehme finds that the legislation of the pricing process in dollars is arbitrary, in the interest of merchants, and contradicts as a decision the force of the law that imposes dealing in the national currency.
She tells Al-Jazeera Net that the Ministry of Economy did not attach its decision to a clear mechanism to control pricing operations in order to unify them, which will strengthen monopolies and speculation with the margins of calculating the exchange rate, not to mention semi-official legislation for dollar transactions on the black market.
She adds that Lebanon is facing an actual danger that threatens the social safety net, because inflation rates are shocking and push people to the bottom as a result of the high percentage of those who are unable to pay the expenses of the goods and services they need.
