Apart from the ebb and flow between the two wings of the banking sector, Salameh’s decision has a profound impact on citizens’ purchasing power and securing their needs. With a million, two or three million Lebanese pounds a month, how will a family of four be able to pay the rent or home premium, secure basic needs, pay school fees, buy medicines, and pay a corona examination? You will not be able. Citizens in Lebanon will be faced with a new type of humiliation imposed on them by the Bank of Lebanon and the banks on the one hand, and the state on the other hand that has abandoned its role and does not want to decide what its social and economic policy is.
“Instead of the central bank devaluing the currency, it reduced the value of people’s salaries and money, by limiting withdrawals. Monetary tools are used to bring about drastic changes in behavior. ” Commentary by the financial expert, Dan Azzi, who explains that “Salameh wants to cancel subsidies on basic commodities, and the resigned Prime Minister Hassan Diab rejected the measure, so the governor decided to reduce consumption. Currently, the citizen is forced to determine on what he will spend the little amount that he gets every month: buy gasoline, go to the restaurant, or buy subsidized medicine? ” Azzi compares the procedure for reducing consumption in Lebanon and with other countries, “such as the United States, which increases the tax rate in order to push people to reduce gasoline consumption, because this must be government policy.”
The Banque du Liban defends itself that in recent months it has pumped nearly 14,000 billion pounds into the market, “to allow depositors to withdraw their dollars pending at the exchange rate of 3,900 pounds against the dollar, and to secure the growing demand, but the pressure on the pound increased and the monetary mass increased frighteningly.” What the sources forget is that this “bloc” did not rise on its own. Rather, it was the Banque du Liban that printed the liras in excess of supply and demand, and one of its main goals was to reduce the mass of deposits in banks, to reduce the liabilities in their budgets and its budget. “Yes,” the sources answer, “but the block became huge, and we discovered that it was not spent, but rather was either stored or used for conversion into dollars.” And she believes that the new method decided by Salameh “will prevent merchants from storing materials, but only importing necessities.”
After months of pushing inflation to its highest levels, the Banque du Liban decided to adjust its “strategy” and absorb the pound from the market, which means an economic contraction. And when there is a recession, the results are usually lower demand due to lower consumption, the inability of the economy to create jobs, increased unemployment rates, high bankruptcies, and a decline in the value of assets and tax revenues … Dan Azzi explains that the measure “will stifle the economy, reduce national income, and lead to Shrinking purchasing power ». We will see a difference in the value between the pound seized in banks, which will lose its value, and the cash pound. For example, a check for 10 million pounds will enable its owner to buy goods for 5 million pounds.
Salameh accuses banks of “taking the pound and exchanging it for dollars at the money changers”
Members of the Central Council, remained insistent in their meeting yesterday that «there is a block of cash in pounds hidden in the homes, this procedure will allow its consumption and return to the banks. Whoever hides dollars in his possession will convert them into lira. We will reduce the cash economy by reducing the circulation of the lira. ” Azzi asserts, however, that this decision “will affect all sectors, as all now need liquidity.” In this context, experts in the financial markets do not rule out that “people will flee in the future, even from localizing salaries.” Even more than that, banking sources ask, “How will the merchant manage his affairs if we were to choke him in the lira?” The problem is compounded because it comes after the intermediate circular No. 573 of the Banque du Liban, which forced merchants of fuel, medicine and wheat to pay the percentage they are required to cover – to secure the price of imported subsidized goods – in lira and in cash. Who will accept payment through the card after today? And where will the sufficient lira be obtained if the Central Bank wants to withdraw it from the market, not pump it? The “radicalism” of the Banque du Liban in solutions that are not based on any scientific logic portends a great disaster.
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