- Title: 'Show me the money'; dollar-hungry businesses squeezed in Lebanon
- Date: 19th September 2019
- Summary: BEIRUT, LEBANON (FILE) (REUTERS) VARIOUS OF PEOPLE WALKING IN STREETS EXTERIOR OF LEBANON'S CENTRAL BANK BUILDING VARIOUS OF CEDAR LOGO ON BUILDING
- Embargoed: 3rd October 2019 17:05
- Keywords: Lebanese economy Lebanese markets dollars in Lebanon exchange rate in Lebanon Lebanese lira Lebanese pound
- Location: BEIRUT AND JIYEH, LEBANON
- City: BEIRUT AND JIYEH, LEBANON
- Country: Lebanon
- Topics: Economic Events
- Reuters ID: LVA002AXBOBPX
- Aspect Ratio: 16:9
- Story Text:Cars line up to fill their tanks but the worker at the gas station in Lebanon's capital city waves them off, pointing at the 'Strike!' signs. "No fuel today," he shouts.
The day of industrial action, replicated at petrol pumps across the country, was not really about fuel, it was about the dollars needed to pay for it, or rather the lack of them.
A stagnant local economy and a slowdown in cash injections from Lebanese abroad has reduced the central bank's foreign currency reserves, making it difficult for businesses to buy the dollars they need from banks.
Some are being forced to go to money exchange houses which charge rates above the official peg of 1,507.5 pounds to the dollar.
Lebanon has not seen such financial strains since its 1975-1990 civil war.
The steady pressure has raised concerns for the stability of a country with crumbling infrastructure where political tensions - local and regional - are never far from the surface, and which hosts around a million Syrian refugees.
Banks in the Middle Eastern state still sell dollars at the official exchange rate but some business owners say they are not able to get the quantities they need from them.
Saddled with one of the world's heaviest public debt burdens at 150 percent of annual gross domestic product, Lebanon's government declared an economic emergency last month to try and get its finances under control.
"The economic situation is tough but we are not a collapsing country at the financial level," Finance Minister Ali Hassan Khalil told a news conference this week.
"Yes, there is not much liquidity in foreign currencies in people's hands in the market, but the dollar exchange rate is still maintained in the banks."
The Lebanese pound has been pegged at its current level against the U.S. dollar for more than two decades and the government has pledged to keep it there. It wants to avoid a devaluation that could hurt people's savings and spending power.
And amid anaemic economic growth and political instability, traditional sources of foreign exchange including tourism, real estate and money sent home by citizens abroad have slowed.
Both dollars and pounds are legal tender in Lebanon, which is a net importer of goods with a persistent need for dollars to fund trade and government deficits.
Amid the demand for dollars, some money exchange houses have raised the amount of Lebanese pounds required to buy dollars beyond the margins set by the central bank.
(Production: Issam Abdallah, Imad Creidi, Yara Abi Nader, Ayat Basma)
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