The Lebanese Finance Ministry said Wednesday the crisis-hit country will hike its fixed exchange rate against the dollar to 15,000 Lebanese pounds starting in November, calling it a “necessary corrective action.”
The Lebanese pound was pegged at just over 1,500 pounds to the dollar in 1997 to encourage investor confidence and to stall hyperinflation after its 15-year civil war. The economy has since struggled following years of conflict, political paralysis and turmoil. By late 2019 the country started to spiral into what the World Bank says is one of the worst economic crises in over a century.
Since then, three-quarters of the population has plunged into poverty, and the Lebanese pound has lost around 90% of its value against the dollar. The market adopted an opaque parallel market rate often referred to as the black market rate. Millions have struggled to cope with skyrocketing inflation.
The government has also adopted several exchange rates for different services outside of the official rate, most recently for phone and internet bills.
But, public sector workers were still paid their salaries at the original exchange rate, decimating their purchasing power.
The Finance Ministry in a statement said the Central Bank had approved the new exchange rate change, and the decision was a “step to gradually unify exchange rates” in the cash-strapped country.
This comes as Parliament passed the country’s national budget on Monday.