Protesters cut off roads in Beirut as lira plunges, fuel price rises

Protesters cut off roads in Beirut as lira plunges, fuel price rises
The Lebanese lira has lost over 97% of its value over the last three years.
3 min read
25 January, 2023
Lebanon's political class has failed to pass any reforms over the last three years to stem the hemorrhaging of the country's economy. [Getty]

Traffic came to a standstill in Beirut on Wednesday as demonstrators cut off key roads in protest of Lebanon's plunging lira, which hit historical lows over the previous two days.

The lira was trading at over 56,000 lira to the US dollar on the parallel market at the time of publishing, a 10,000 lira decrease from the week prior.

Fuel prices, which are tied to the price of the dollar, soared in response – with a 20-litre tank of petrol being sold at over one million lira (US$17.5), a historical high.

"The price of fuel and the dollar has really affected us, we are still being paid on the old [exchange] rate. What can we do? We have to keep working just to be able to survive," Hussein Mashik, an uber driver, told The New Arab.

"Sometimes we are not making a profit at all," Mashik added.

Lebanon's official exchange rate is still pegged at 1,500 lira to the dollar, although the prices of goods in the country are made at the parallel rate and are tied to the price of the dollar.

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The country's national currency has been steadily declining since its financial meltdown in October 2019, losing 97 per cent of its value since.

Despite the essential dollarisation of Lebanon's economy, the majority of the country's workforce is still paid in Lebanese lira. What used to be a modest salary of three million lira now is about US$50.

Public sector employees, in particular, have suffered from the decline in purchasing power, as their salaries have dwindled to well under US$100.

The price of many goods, especially imported goods like fuel, medicine and many foodstuffs, fluctuate with the dollar's price.

Over two million people in Lebanon are currently experiencing acute food insecurity, with the number expected to rise to 2.3 million by April, according to a January report by USAID.

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The crisis is worsened by incessant political gridlock, with the country lacking both a president and an elected government.

"The establishment is not even paying attention. The parliament have abandoned their responsibility to elect a new president and solve the political crisis," Carlos Abdallah, the president of the National Federation of Employees' and Workers' Union in Lebanon (FENASOL), told TNA.

The parliament has failed to pass the reforms necessary to access international aid from the IMF – viewed as the first step in restoring international investor confidence in Lebanon.

The IMF has said that Lebanon needs to pass a capital control law as well as distribute the share of losses in its financial sector before it extends a loan.

"Unfortunately, it is the poor that are paying the price. Food, hospitals and the health sector. How will these be affected by the rise in the dollar and fuel prices?" Abdallah said.