Rita el-Husseini stares carefully at the price tags set in U.S. dollars at a supermarket in the Lebanese capital of Beirut. She holds her mobile phone to calculate the price of each item she needs to pay in Lebanese pounds.
“Most people in Lebanon work in the public sector and receive their salaries in Lebanese pounds. Why would prices be set in U.S. dollars?” she asked.
“Every time I want to buy anything, I have to calculate the price in Lebanese pounds to figure out if I can afford it,” she told Xinhua.
Layal Abdine, who works at a public school in Beirut, told Xinhua her salary is around 7 million Lebanese pounds (about 65 U.S. dollars).
Abdine said she feels anxious every time she goes to the cashier to pay for her products because a few dollars are equivalent to hundreds of thousands of Lebanese pounds, which eats up her shopping budget, she added.
On Feb. 16, Lebanese caretaker Economy Minister Amin Salam announced that supermarkets in Lebanon would price their products in U.S. dollars starting Feb. 22 in response to the sharp daily fluctuation in prices due to the fast change in the exchange rate of the U.S. dollar to the Lebanese pound.
“We cannot change the prices of 38,000 products daily in supermarkets with every change in the U.S. dollar price,” Salam said, adding that customers can pay in Lebanese pounds according to the daily exchange rate of the U.S. dollar.
People in the public sector perceived the minister’s move negatively, while employees of the private sector who are partly paid in dollars or those receiving income from foreign countries welcomed the step, saying that it “makes their lives easier.”
Wassim Marrouch, who was buying diapers for his baby, believes the economy ministry’s decision to price items in U.S. dollars is wise.
“People will be able to pay a specific amount in U.S. dollars instead of witnessing daily changes in prices set in Lebanese pounds,” he said.
Lebanon’s steep financial crisis caused a collapse of the local currency by over 90 percent, plunging over 80 percent of the population into poverty.
Official statistics estimate that around 80 percent of the Lebanese population is employed in the public sector which pays salaries in the collapsing local currency, making it hard for them to meet their most basic needs, including food and medicine.
The Lebanese people have to cope with multiple exchange rates, including the official rate set at 15,000 LBP, the central bank’s Sayrafa rate used by commercial banks and foreign exchange dealers set at 79,500 LBP, and the current black-market rate at 107,000 LBP, which reflects the actual value of the U.S. dollar.
The economy minister defended his move by saying that these are temporary solutions and exceptional measures to adapt to the quick change in the exchange rate.
The minister was accused of attempting to dollarize the Lebanese economy, which he denied, adding that he is keen to protect the national currency. Still, he said exceptional measures are needed to overcome the current difficult situation.
Adnan Rammal, a representative of the trade sector in the Economic and Social Council, told Xinhua that the decision to price products in supermarkets in U.S. dollars benefits importers, supermarkets, and customers.
Meanwhile, he added, clients will find it easier to compare prices between supermarkets since the prices are now fixed in U.S. dollars instead of witnessing daily price changes in Lebanese pounds.
Bassem El-Bawab, an economist and a business instructor at the American University of Beirut, told Xinhua that the drawback of such a step is that consumers will get used to dealing with the U.S. dollar, which will undermine the national currency over time.
“This is psychologically bad,” he said.
He added that with time, consumers might ask for their wages to be paid in U.S. dollars since prices are set in foreign currency and eventually lead to the entire dollarization of the economy. ■