Dina Mahmoud (London)
At a time when the economic and financial crisis that has hit Lebanon for more than two and a half years continues, burdening the residents of this country, whose purchasing power has been eroded by the collapse of the lira by more than 90%, the debate has renewed during the past few weeks, about the possibility of enhancing the value of the local currency, By reevaluating them by deleting zeros from them.
At the head of those who put forward this proposal recently, Riad Salameh, the governor of the Central Bank of Lebanon, who said that his bank would propose to the government being formed in Beirut, to enact a law requiring the issuance of larger categories of the lira, with the aim of facilitating its use, in light of its massive and accelerating devaluation. Against foreign currencies, especially the US dollar.
In practice, this means deleting zeros from the Lebanese currency, as happened before with the Turkish lira, according to a law issued in early 2004, which led to its re-evaluation, by deleting 6 zeros from it, as of January of the following year.
Many countries in the world have previously followed this path, such as Iran, the Netherlands, Argentina and Brazil, as well as Germany after the First World War, following the heavy losses that it caused to this country and its infrastructure.
Currently, the 100,000-pound category constitutes the highest category of Lebanese currency, at a time when the price of one dollar on the black market for currencies is close to 29,450 pounds, which in the view of supporters of the option to delete zeros, hurry to proceed on this path in As soon as possible. They say that the revaluation of the lira may contribute to encouraging the population and companies operating in Lebanon to keep the local currency, use it and prevent what is described as “dollarization”, a term that means replacing the US dollar in transactions to be more like the official currency of a country, due to the collapse of the value of its currency. local.
However, experts who spoke to the “Modern Diplomatic” website, stressed that Lebanon’s economic problems need more radical solutions, beyond simply revaluing the lira or even changing its name, as some have suggested during the past few months, even despite the effects that this may entail. Positive psychology may help the Lebanese currency to regain some of its crumbling credibility.
In the long run, it is unlikely that such solutions will significantly enhance the purchasing power of the Lebanese, or change the equations that govern the relationship between supply and demand for goods in the markets, which will eventually reduce its expected impact on the severely high inflation rates at the present time. The experts stressed that countries that are afflicted by a violent economic and financial crisis, such as those currently sweeping Lebanon, face many difficulties to restore the confidence of local and foreign markets in their economy, which requires them to carry out real reforms and amend the policies that caused them to fall into a state of “free fall” that decline in it.
In the opinion of these experts, only deleting zeros from the pound, without this being accompanied by a complete adjustment of economic and monetary policies in Lebanon, will empty this option of its content, and make it without effect on the ground, a scenario that many fear could happen, in light of the continuing divisions. On the domestic scene, many political forces put their own agendas ahead of the country’s public interest.
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