BEIRUT: Supermarket owners in Lebanon have blamed Banque du Lebanon’s “tough measures” for the introduction of a new payment system for their customers.
According to Nabil Fahed, head of the supermarket owners’ syndicate, the central bank’s transition requires 50 percent of the purchase price to be paid in cash and 50 percent via bank cards, due to “low liquidity” in markets.
This development happened on the same day that gas station owners decided to stop accepting full payment for fuel through bank cards.
Dr. Jassim Ajka, an economist, described the results as “economically disastrous”, limiting the amount of banknotes a citizen can take from banks in the Lebanese pound while prices are rising.
He claimed that this situation would make people consume less, which would lead to a fall in GDP and a major contraction in the economy.
Charles Arbid, president of the Economic and Social Council, said that Lebanon is “experiencing an inflationary depression: that is, consumption and economic movement are at a standstill.”
Operating prices are also rising for sectors such as energy and transport, development, he said, necessitating the immediate start of three-pronged participatory dialogue at the government level with employers and workers to formulate solutions and take action.
He added: “No solution is magical and readily available.”
Meanwhile, a union of banks in Lebanon will pay government-approved social assistance to public sector workers, including the military.
The assistance is equivalent to half of the additional salary per month with a minimum of 1.5 million Lebanese pounds ($993) and a maximum of 3 million pounds. Of this, sixty per cent is paid in cash, and the remaining 40 per cent is being transferred by bank card or cheque to other modes of payment.
Naval Nasser, president of the Public Administration Staff Association, said: “We can no longer approach it with this level of absurdity.
“As of now, we are committed to one day of attendance and will stop doing so if this process is implemented.”
The repercussions of Russia’s invasion of Ukraine, which has further exacerbated the world’s oil crisis and its derivatives, have also reached Lebanon.
A gallon of gasoline currently costs £500,000 in a Mediterranean country, and must now be paid for in cash.
Abdo Sade, the head of a group of private generator owners, warned on Saturday that the monthly subscription fee would rise between 30 percent and 40 percent because of the high price of diesel for their generators.
Prices are currently between £800,000 and £2 million, and possibly even more depending on consumption, he added,
“After March 15, we may shut down generators in most areas as people are unable to pay consumption charges and there is (liquidity) shortage,” Sade said.
The severe economic crisis that Lebanon has faced for two years has halted bank transfers abroad, with many banks introducing new rules to manage deposits.
Withdrawals in Lebanese pounds and dollars no longer correspond to the amount citizens have to pay for their expenses.
Traders argue that they have resorted to this process because they pay importers in cash for their goods.
Ajaka explained: “Why do they want to pay cash? The first reason is that suppliers only accept cash, which means the problem is with the supplier, whose reasons for doing so should be investigated. The second reason is That traders work with illegal people.The third reason is to keep the money in cash as a safety margin in case the situation worsens.
He pointed out that the traders argue that banks ask them to put in their daily income(s) so that they can transfer money to their employees in cash while paying their salaries.
Ajaka said the reliance on cash increased tax evasion, as merchants then declared their business undervalued, and deprived of the banking sector’s resources to pump it back into the economy.
A Beirut bank manager, who declined to be named, told Arab News that the BDL “works by activating a banking lesson to “dry up the market from the Lebanese lira (pound), in addition to curbing the black market”. Purpose also takes other measures that manipulate the dollar exchange rate.
“At the same time, it has decided not to respond to requests from banks for liquidity in the Lebanese lira, asking them to obtain it from the market.”
The bank manager said: “The central bank believes that the large amount of liquidity that had flown out in the lira was not returned to the central bank through circulation. So where did this money go? It was either through storage.” taken or to supply the black market.”
The source said that although Greece adopted the measure during its economic crisis, it may not be adopted for long.
Ajaka believes that the authorities are likely to issue “laws and orders to compel merchants to accept payments by bank cards as it is not possible to continue with cash in this manner.”