Afiouni: Sticking to dollar peg is at the depositor's expense

Sat 09 Jan 2021 at 19:47 Twitter

NNA - Former Minister Adel Afiouni tweeted Saturday over the issue of floating the US dollar-Lebanese pound exchange rate, saying: "Floating the exchange rate today is a fait accompli, as most Lebanese are dealing at the black market price."

He added that maintaining the official exchange rate weighs heavily on the Central Bank's reserves, considering that since these reserves are sums borrowed by the Central Bank from depositors, then sticking to the official rate is occurring at the expense of depositors.

Afiouni deemed that "the Central Bank's use of the official exchange rate to support basic commodities is a wrong, ineffective, costly and unfair mechanism," considering that it must be replaced by a subsidy program from the state treasury, not from reserves, one that benefits the poorer classes directly, and comes within a comprehensive social safety net to fight poverty.

"As for the use of the official exchange rate in the budgets of the Central Bank and banks, it covers the actual losses at an artificial exchange rate, and leads to unrealistic budgets that have no credibility or confidence in them, which is one of the causes of the sector crisis," he corroborated.

Afiouni explained that a restructuring of the Central Bank and banks, a transparent identification of losses and clear, honest budgets are required instead. He stated that these reforms would be implemented as part of a comprehensive rescue plan, the cornerstone of which would be a support program from the IMF that provides the state with the necessary liquidity in currencies as soon as possible.


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