BDL Subsidizes Dollar for Food Importers, Manufacturers and Industrialists
Banque du Liban, Lebanon's central bank, on Wednesday issued two memos subsidizing the dollar exchange rate for the importers and manufacturers of essential foodstuffs as well as industrialists.
The first memo says BDL would provide commercial banks with the necessary foreign currencies in order to cater to the needs of the importers and manufacturers of essential foodstuffs.
The second memo says commercial banks can ask the central bank to provide 90% of the foreign currencies needed by industrial institutions to import raw material.
According to the memo, the aforementioned institutions will have to transfer to Lebanon an amount of foreign currencies resulting from their export revenues. The amount should be equivalent to at least the amount of foreign currencies that was used to fund their raw material imports.
Lebanon is facing its worst economic crisis since the 1975-1990 civil war, now compounded by more than two months of a coronavirus lockdown. The local currency has lost more than half its value on the black market in recent months, from the official rate of 1,507 to more than 4,000 pounds to the dollar. Poverty has soared to 45 percent of the population, and inflation is over 50 percent, according to official estimates.
Prime Minister Hassan Diab had announced Thursday that he had been "given a promise from the governor of the central bank that the central bank will intervene in the market... to protect the Lebanese pound and to curb the high dollar exchange rate."
The central bank last month ordered exchange offices to cap the rate at 3,200 to the dollar, but the pound has continued to tumble.
Lebanon has charged a top central bank official with manipulating the exchange rate, and has detained dozens of money changers in recent weeks as part of a larger crackdown on currency manipulators.
Shortly after Diab's speech, the central bank governor said "necessary measures to protect the Lebanese pound" would come into effect on May 27.
The central bank "will secure dollars for the import of basic food products," in coordination with the economy ministry as part the measures, Salameh said in a statement.
The devaluation of the Lebanese pound has led to major hikes in the price of food, much of which is imported.
A liquidity crisis since the fall has seen banks gradually restrict, then stop dollar withdrawals and transfers abroad, further complicating food imports.
Diab promised action to alleviate the effects of inflation on the economy.
"The import of basic food commodities will be subsidized according to fixed schedules," he said. "There will be a daily follow-up to reduce food prices and Lebanese people will soon be witnessing a decrease in relevant commodity prices," he added.