The prices of basic goods in Lebanon have soared as the value of the local currency plummets, and yet the Lebanese government and central bank have defended the peg.
While still technically pegged to the dollar at 1,507 Lebanese lira to $1, the street value has climbed up and traded around 9,000 lira on the dollar, losing over 80 percent of its value. However, at the tail end of July, the rate stabilized around 7,600 to the dollar, local newspaper the Daily Star reported.
While the price of food climbs, the government has stood by the peg, making payments to state institutions and hospitals at the official exchange rate. But the government has fallen behind on payments to institutions, owing the American University of Beirut Medical Center $150 million in medical bills, and unpaid dues to private medical facilities stand at an estimated $1.3 billion since 2011.
The peg has stabilized Lebanon’s currency since its introduction in 1997, but following years of government corruption and mismanagement, that peg began to slip last October as mass protests broke out across the country.
It has continued its rapid decline in the following months, spurring widespread hunger as the fast-sinking economy has put more Lebanese out of work.
The problem of hyperinflation in Lebanon is compounded as some percentage of Lebanese citizens get paid in Lebanese Lira while the majority of goods and products are imported from outside the country.
While the prices in dollars of many goods has remained stable, the cost in the local currency has skyrocketed. Though the two currencies have been historically used interchangeably, dollars began to dry up in mid-2019. Heavily dependent on imports, Lebanon needs dollars to secure goods from abroad, including some 80 percent of its food.
The government announced that it would still supply importers of wheat, medicine, and fuel dollars at the official rate, but medical suppliers, millers, and gas station owners have still threatened to go on strike in previous months.
Many goods have become unaffordable for average Lebanese families. On Facebook, mothers sought to swap goods for milk formula to feed infants and other staples. The price of bread, still subsidized, has also been raised. The Lebanese Army scrapped meat rations, as they became unaffordable. In Lebanon’s second largest city Tripoli, butcher shops were closed this week as many around the region were celebrating Eid al-Adha. But in the northern city, there were no signs of festivities this year.