Lebanon currency plunges 80%. Lebanon’s economic and financial crisis has deepened, as the local currency is in a free fall. The Lebanese pound sold to the U.S. dollar at local exchanges at a cost of 8,000 on Sunday, losing around 80 per cent of its value in the past 10 months.
The IMF has warned Lebanon that it has incurred losses of up to 170 trillion pounds from its central bank, Banque du Liban, the Financial Times announced on Thursday. The publication clarified that “a number of sovereign debt and currency swaps with local lenders … were used by the central bank to boost the banking sector, raise foreign currency and stabilize the Lebanese pound.”
Citing people familiar with the matter, the publication reported that the IMF told the Lebanese finance minister and central bank governor “That activity, combined with the impact of Lebanon’s default in March on the bank’s sovereign bond holdings and a collapse in the value of the currency, has resulted in accumulated losses of about L£170tn”.
The losses equate to 91% of Lebanon’s total economic output in 2019 and are almost equal to the total value of the deposits held by the central bank from the country’s commercial banks, the news outlet conveyed. The pound had been pegged at 1,507.5 to the U.S. dollar since 1997.
The disagreement between the Lebanese government and the central bank put the prospect of obtaining much-needed emergency financing from the IMF at risk. IMF Managing Director Kristalina Georgieva said Friday that she did not “expect progress in the negotiations with the Lebanese officials.”
Georgieva added “IMF officials are still working with Lebanon, but it is not clear whether it is possible for the country’s leaders, active parties, and society to agree on implementing the reforms needed to stabilise the economy and boost economic growth.”
[image: Ramy Kabalan]