Lebanon to introduce higher denomination banknotes as inflation soars
Lebanon’s finance and budget committees approved on Tuesday a draft law allowing larger banknotes to be printed as the country continues to experience hyperinflation.
The draft law enables the Lebanese Central Bank to print notes larger than 100,000 Lebanese lira ($1.05 USD), currently the largest denomination in the country.
The law will now be forwarded to the general assembly, where it will be voted on before becoming law.
The Central Bank is reportedly considering creating 500,000 and 1 million lira banknotes, equivalent to about $5 and $10, respectively at current parallel market rates.
Lebanon’s currency has lost over 98 percent of its value since the beginning of its financial crisis in the Autumn 2019.
The prices of basic goods have skyrocketed since, though the value of wages has generally stayed static.
In March, supermarkets began to price their goods in dollars, in what officials said was a move meant to promote transparency by cracking down on price manipulation.
Measures intended to arrest the currency’s nosedive have largely failed, despite Lebanon’s central bank using hundreds of millions of its foreign reserves to try and stabilise the value of the lira.
Economists have said that Lebanon’s economic and inflation crisis will continue unless key economic reforms are made, specifically those laid out by the International Monetary Fund (IMF).
The IMF and Lebanon have come to a "staff-level agreement" for an over $3 billion loan to the beleaguered country, but the loan is contingent upon the implementation of said economic reforms.
Lebanon’s politicians, however, have not come close to meeting any of the IMF's criteria since the onset of the country's economic crisis.
On Tuesday, Reuters revealed that Lebanon was likely to be placed on a “grey list” for its “unsatisfactory practices” to prevent money laundering and terrorism financing.
If placed on the list, Lebanon’s economy would be further cut off from the international financial system.