In a pessimistic scenario relying on the immobility of the Lebanese political class, the Institute of International Finance (IFI) predicted in its latest report published last July that the Lebanese pound would continue to depreciate until it reached “40,000 Lebanese pounds the dollar by the end of the year”. In the end, we did not have to wait so long, the dollar / pound rate passing this milestone on Friday early evening, after having touched it for almost a week.
A new record of weakness therefore, in a Lebanon which will celebrate on Monday the three years of its October revolution catalyzed by the beginning of an unnamed economic and financial crisis. The IFI, which also predicted in this same scenario a dollar at 110,000 pounds in 2026, is not the only institution to try its hand at worst-case projections. Bank of America (BofA) had in July 2020 predicted in a report that the dollar “could reach more than 46,000 pounds” by the end of 2022.
Two years later, this bad omen could finally prove to be given the immobility of the political class to initiate the reforms necessary for the country’s economic recovery, despite the preliminary agreement concluded in April with the International Monetary Fund providing financial assistance of up to $3 billion over four years. In the meantime, the national currency has lost 96% of its value in three years, collapsing the purchasing power of at least 80% of Lebanese who have fallen below the poverty line, according to Escwa.
In terms of pessimism, the World Bank had also expressed this feeling by anticipating last May a contraction of the Lebanese GDP of 6.5%. The institution should update its projections after its autumn meetings with the IMF, while the WB had not issued any numerical projection concerning Lebanon in its last report on the Middle East and North Africa zone. On the side of the IMF, whose managing director Kristalina Georgieva, called on Lebanese officials on Thursday to “put their country and their people first”, it no longer even provides estimates of Lebanese GDP since 2021 in view of the continued uncertainty of the situation. According to official figures published by the Central Administration of Statistics, which stop at 2020 (with a contraction of 25.9%), Lebanese GDP has halved and is currently worth less than 20 billion dollars.
In a pessimistic scenario relying on the immobility of the Lebanese political class, the Institute of International Finance (IFI) predicted in its latest report published last July that the Lebanese pound would continue to depreciate until it reached “40,000 Lebanese pounds the dollar by the end of the year”. In the end, we didn’t have to wait too…