BEIRUT -- The value of the Lebanese pound hit a new low on Thursday, trading at 50,000 to the dollar, as the country's deeply divided Parliament failed to elect a president for the eleventh time.
The cash-strapped Lebanon's currency, once valued at 1,500 to the dollar, has been tanking since late 2019 and has since lost over 90% of its value. The financial crisis has plunged three-quarters of the population into poverty, with millions struggling to cope with some of the world's sharpest inflation. Experts blame the country's entrenched ruling elites for decades of corruption and financial mismanagement.
The pound's plunge comes days after a European judicial delegation from France, Germany, and Luxembourg came to Beirut to interrogate embattled Central Bank governor, Riad Salameh, and a dozen other people, some of them his close associates, in a European money laundering investigation of some $330 million. They have so far questioned banking officials and former central bank officials. Switzerland and Liechtenstein have also opened probes against Salameh on money laundering allegations.
Lebanon's split Parliament is in flux after continuously failing to agree on a new head of state since President Michel Aoun's six-year term ended on Oct. 30.
All but 18 of the Parliament's 128 legislators showed up Thursday, with most — 71 lawmakers — voting either for parliamentarian Michel Moawad, an outspoken critic of the Iran-backed militant Hezbollah group, or casting blank ballots.
Later Thursday, a handful of reformist legislators started a sit-in inside the parliament building, refusing to leave until Speaker Nabih Berri holds an open-ended session to elect a new president. The authorities locked the doors and cut off power but after nightfall, the sit-in was still underway.
The worsening political paralysis has Lebanon not only without a president but also with only a caretaker government, stalling a host of economic reforms aimed at stopping wasteful spending and combatting rampant corruption.
A senior financial adviser, Michel Kozah, said the Lebanese pound’s worsening deterioration is due to the absence of appropriate measures to stabilize the currency early on in the crisis, including formal capital controls, and a plan approved by the International Monetary Fund.
Instead, he said, there have been short-term policies and circulars from the government and central bank that he describes as a “shot of morphine.”
“We gave promises to the IMF but did nothing,” Kozah explained. “If you were anywhere else in the world, you wouldn’t get to where you are today because the authorities would have taken measures from day one.”
Lebanese authorities in April 2022 reached a tentative agreement with the IMF for a recovery plan conditional on a host of economic reforms and anti-corruption measures. However, the international organization has been critical of Lebanon's sluggish efforts to meet these demands.
Meanwhile, Lebanon’s cash-strapped banks continue to impose strict limits on withdrawals of foreign currency, imposed in October 2019, tying up the savings of millions of people. As the economy continues to tank without any reforms, some depositors have resorted to storming bank branches and taking their trapped savings by force.