Lebanon adopts ‘dollarization’ as currency, economy crumble
The Hindu
The Lebanese pound has lost 95% in value since late 2019, and now most restaurants and many stores are demanding to be paid in dollars to bypass what’s seen as a nearly useless currency
When Moheidein Bazazo opened his Beirut mini-market in 1986, during some of the fiercest fighting in Lebanon’s civil war, he didn't expect it to thrive. But several years later, he had shelves full of food and needed 12 employees to help him manage a bustling business.
Those days are over. Bazazo now mostly works alone, often in the dark to reduce his electric bill. Regular customers are struggling to make ends meet, and as they buy less so does he, leaving some shelves and refrigerators bare.
With the Lebanese economy in shambles and its currency in free fall, Bazazo spends much of his time trying to keep up with a fluctuating exchange rate. Businesses like his are increasingly leaning on one of the world’s most reliable assets — the U.S. dollar — as a way to cope with the worst financial crisis in its modern history.
“I once lived a comfortable life, and now I’m left with just about $100 after covering the shop’s expenses" at the end of the month, Bazazo said, crunching numbers into a calculator. “Sometimes it feels like you’re working for free.”
The Lebanese pound has lost 95% in value since late 2019, and now most restaurants and many stores are demanding to be paid in dollars. The government recently began allowing grocery stores like Bazazo’s to start doing the same.
While this “dollarization” aims to ease inflation and stabilize the economy, it also threatens to push more people into poverty and deepen the crisis.
That's because few in Lebanon have access to dollars to pay for food and other essentials priced that way. But endemic corruption means political and financial leaders are resisting the alternative to dollarization: long-term reforms to banks and government agencies that would end wasteful spending and jump-start the economy.