President Michel Aoun says central bank will begin injecting dollars into market beginning on Monday in hopes to solidify Lebanese pound, following demonstrations against falling currency.
Lebanon's central bank will begin injecting dollars into the market beginning on Monday in order to strengthen the Lebanese pound, President Michel Aoun said on Friday, following a rapid fall in the currency in recent days.
Speaking at the start of a cabinet session, Aoun said huge losses to the financial system should not be borne by depositors but instead by the government, central bank and commercial banks.
Earlier, Lebanese parliament speaker Nabih Berri said the government was working on steps to strengthen the country's collapsing pound currency, with an aim of reducing its price against the dollar to 3,000-3,200 pounds.
The pound has seen its value fall quickly in recent days, slipping to about 5,000 to the dollar on Thursday from about 4,100 a week earlier, sparking protests across the country.
The pound has lost some 70 percent of its value since October, when protests first erupted and the country plunged into a financial crisis that has seen dollars dry up and the economy grind to a halt.
Despite renewed government push to strengthen the currency, more protests are expected in Lebanon, journalist Imogen Kimber told TRT World.
"There's absolutely no certainty... people here are in a desperate situation. I think we are expecting to see more protests."
Agreement on speaking to IMF
Lebanon's central bank has tried to rein in the currency's collapse, agreeing last week with money changers to set a unified daily price that would be gradually reduced to 3,200 pounds, but importers have said dollars at this reduced price are unavailable.
The heavily indebted country has maintained an official dollar peg of 1,507.5, but dollars at this level have been rationed exclusively for imports of fuel, medicine, and wheat.
Berri also said there was agreement reached on speaking to the International Monetary Fund (IMF) in "one language," amid disagreement between MPs, the central bank and government officials engaged in talks with the Fund for an economic reform programme.
Beirut is hoping to secure billions of dollars in financing, but the talks have been stalled by internal disagreements over the value of huge losses in the financial system and proposals for how to cover them.
Protests over economic decline
An economic downturn since last autumn has seen widespread layoffs and pay cuts that have plunged 45 percent of the population into poverty.
The worst economic turmoil since the country's 1975-1990 civil war has sparked an unprecedented street movement against a political class accused of being corrupt and incompetent.
After the Lebanese pound hit a new low on Thursday, down around 70 percent from its official rate, protesters took to the streets after sundown, setting tyres on fire and blocking roads including in the capital Beirut.
Demonstrators chanted against a government that has been unable to arrest the economic decline, as well as against the governor of the central bank Riad Salame.
"Riad Salame, game over," read the front page of the Al Akhbar newspaper close to Shia movement Hezbollah on Friday morning.
"Revolution of hunger," the Jumhuriya daily said.
Tensions have grown recently between the Hezbollah-backed government and the central bank's governor.
Experts say the cabinet would like to see Salame removed from the position he has held since 1993.
Protesters accuse Salame of having encouraged a policy of increasing state borrowing over the decades that they say benefited only the country's banking and political elite.
Anger against banks has also risen in recent months, after they banned all transfers abroad and gradually restricted dollar withdrawals, forcing those in need to buy the greenback at much higher rates on the black market.
Hezbollah supporting protesters
"Several currents taking part in the protests want to topple the central bank governor and hold him accountable for the financial" crisis, analyst Imad Salamey said.
"Hezbollah wants to change the central bank chief," the Lebanese American University professor told AFP news agency.
Hezbollah supporters joined the demonstrations late Thursday, despite usually being against the protest movement since October 17.
The previous government stepped down under street pressure just weeks into those demonstrations, and Diab's cabinet started working earlier this year.
One of the most indebted countries
Lebanese media reported the exchange rate had reached 6,000 pounds per dollar on the black market on Friday, compared to the official peg of 1,507 in place since 1997.
The central bank late Thursday hit out at "baseless" information on social media of "exchange rates at levels far from reality, which mislead citizens."
Lebanon — one of the most indebted countries in the world with a sovereign debt of more than 170 percent of its GDP — went into default in March.
It started talks with the IMF last month in a bid to unlock billions of dollars in financial aid, but these are still ongoing.