Thursday, the dollar was trading above the 7,000 LL mark according to the lebaneselira.org website, nearly five times the official rate.

And this while the monetary, governmental and security authorities had promised on June 12, in the face of growing anger from the population, to quickly reduce this rate below 4,000 LL.

The measures announced at the time (injection of dollars into the economic circuit and repression of exchange offices) to achieve this objective were doomed to failure because they were based on a very short-term approach, without the slightest vision or real will of the public authorities to curb free fall. of the currency and its literally catastrophic consequences for the whole of Lebanese society.

Legitimize

Tried to control the effective foreign exchange market and waste scarce dollar reserves in the absence of a plan to exit the crisis will only increase its disastrous effects.

The resignation of Henri Chaoul (member of the board of Kulluna Irada) from the negotiating team with the International Monetary Fund confirms that the prospects for the implementation of a macroeconomic stabilization plan and the restructuring of public debt, the Central Bank and the banking system are receding.

A such a plan is a sine qua non condition for stabilizing the pound.

In reality, it was the authorities who resigned from their responsibilities to safeguard the public interest.

The Lebanese are therefore right to be angry: this currency crisis is part of a much larger debacle that, day after day, continues to threaten their jobs, savings, purchasing power and hopes for the future of the country.

Despite growing social frustration and impending economic implosion, the political system that governs the country has not changed its habits one iota: administrative appointments (in the financial sector in particular) have been made on a clientelist basis; Parliament continues to block key legislative reforms; and the government has not taken any action to demonstrate its ability to act on the course of events in a coherent and credible manner; as for the monetary authorities, they persist in denial with the sole effect of passing on the cost of their mistakes to a bloodless population.

It is in fact totally irresponsible to continue to make depositors believe that they can still be spared by the colossal losses accumulated in the financial system (the Central Bank's share of the "hole" is greater than that of the public debt).

Deposits in curities are prisoners of a banking system that combines arbitrary and discretionary measures with coverage regulatory authorities that have freed themselves from all international standards of governance in the sector.

It's time to face the facts: US dollar accounts almost no longer exist and have been replaced by a currency that is only used in Lebanon, the "Lebanese dollar", whose value continues to depreciate, as evidenced by the rising cost of suspicious transactions to convert them into real greenbacks.

Vouloir to hide this reality implicitly amounts to postponing to all Lebanese the absorption of losses rather than distributing them equitably as required by the most basic rules of management of economic and financial crises.

In the face of the crisis, Lebanon needs more than ever an economic and political vision that can restore confidence in the system, secure foreign capital inflows and strategically manage the few remaining foreign exchange reserves.

Or, it is now clear that the power structure in place since the end of the 1975-1990 war is hardly able to provide such a vision and even less to act accordingly.

Only a political transition and the establishment of a civil status based on respect for institutions and the defence of the public interest, guaranteed by an independent judiciary, are able to give some hope of not sacrificing a new generation of Lebanese.

Calamitous measures

The latest government measures have proven calamitous in several respects.

They initially unacceptably accentuated the depletion of the country's dollar reserves.

By using part of the remaining reserves to pump dollars into the market and artificially lower the rate, the Central Bank has effectively increased the losses of the Lebanese.

It is therefore more essential than ever to carry out an audit of the BDL's accounts, as Kulluna Irada has been calling for since the beginning of the crisis, to precisely quantify the losses and establish the real value of the remaining foreign exchange reserves.

The latter should then be managed by a capital control law, the adoption of which is still pending, which gives priority to the use of  curities for vital imports in the coming months.

Until a possible agreement is reached with the international community for the implementation of a broader rescue plan.

Next, the repressive approach taken by the government to respond to speculation is counterproductive.

By strengthening police measures targeting the black market and by significantly and arbitrarily capping the potential beneficiaries of foreign exchange transactions, this policy will only exert upward pressure on the exchange rate while reinforcing market opacity, with the usual consequences of this culture of secrecy in terms of social inequalities and economic inefficiency.

As much so since this repressive approach also has a censorship-like component.

By asking the Ministry of Justice to target those accused of spreading false information about the decline of the currency, the government opens the door to serious obstacles to freedom of expression while increasing citizens' uncertainty about the reality of exchange rates.

In addition, presenting the continued depreciation of the pound as the product of deliberate manipulation by certain opposition forces, foreign or internal, is essentially a diversionary tactic.

If some are undoubtedly trying to take advantage of the current instability to settle political scores, reducing the narrative of the currency crisis to this political dimension is nothing less than an attempt to divert attention from its main reasons.

Lister confidence; lack of liquidity in dollars; rapid increase in local currency supply; implosion of the Syrian pound; continued mismanagement of foreign exchange reserves and inability of the government to implement the necessary reforms...

The list goes on.

Change approach

In the end, this short-term approach increases the bill of the Lebanese which is already particularly heavy.

The waste of the remaining dollars only reduces our ability to continue to fund essential imports in the coming months, including fuel, wheat and medicines, threatening dangerous shortages in the near future.

In the absence of a comprehensive approach, based in particular on sound monetary and fiscal policy, the worst is yet to come.

The depreciation of the currency is due to a crisis of confidence of the actors, which has been continuously undermined by the authorities.

It is also the result of an imbalance between supply and demand produced by years of catastrophic fiscal and monetary policies, which have resulted in unprecedented financial losses, equivalent to more than twice the size of the economy.

In the absence of immediate drastic measures, Lebanon is inexorably heading towards an exponential deterioration of the situation: depletion of reserves in  currencies ; runaway inflation and economic collapse even more severe than currently expected.

By KULLUNA IRADA

Non-governmental organization founded and exclusively funded by Lebanese residing at home or abroad