Lebanese officials said on 3 November that the country is unable to put its new exchange rate into effect, after its outgoing president declared the state budget unconstitutional and refused to sign off on it, according to Arab News.

In late September, the Finance Ministry announced that Lebanon will slash its official exchange rate, dating back 25 years ago, from 1,507 per dollar to 15,000 per dollar in an effort to unify the country’s multiple exchange rates. The measure was set to take effect on 1 November.

The current official exchange rate was 1,507 lira per dollar, which was set in 1997 after 15 years of war to “encourage” investor confidence and stall hyperinflation. However, since the beginning of the financial collapse in 2019, the Lebanese pound has lost over 95 percent of its value. 

The “market” adopted an oblique parallel rate, known as the “black market rate.” In May, the Lebanese pound had reached a historic new low of 35,000 liras to the dollar.

According to Reuters, a dollar currently fetches around 38,000 lira on the parallel market.

Finance Minister Youssef Khalil stated that this measure was a “fundamental step” to improve the economic outlook of the country and was a major milestone that was agreed upon with the Central Bank’s (Banque du Liban) Governor Riad Salameh.

According to Arab News, “passing the 2022 state budget and unifying Lebanon’s several exchange rates are some of the prerequisite reforms needed to reach an International Monetary Fund-approved recovery plan to make the country viable again”.

Lebanon and the IMF reached a preliminary agreement providing for the disbursement of 3 billion dollars over four years to help the country recover from an economic crisis that caused the national currency to lose more than 90% of its value and plunged the majority of the population in poverty, according to AP.

Beirut has yet to implement several mandatory economic and financial reforms to unlock this financial assistance. An IMF delegation visited Lebanon in September and said it “regrets” that the economy is suffering from a “serious depression” and that “despite the urgency” little progress has been made to implement the necessary reforms, according to EFE.

Since the start of the financial collapse, about 80 percent of the population has descended into poverty. The annual inflation rate for Lebanon in 2021 was 154,8 percent, whereas, in February, it reached 215 percent.