The Lebanese are anticipating the year 2023 with much anxiety and suspicion, and it will bring them to a new peak in the course of a dramatic collapse that has not calmed down since the fall of 2019, and they are preoccupied with what their living situation will become, after the collapse of the lira at the end of 2022 reached a shocking level, with the exchange rate of one dollar exceeding 46 thousand.
Observers are wondering about the fate of the negotiations with the International Monetary Fund to obtain an aid program ranging between 3 and 4 billion dollars, at a time when its conditions have not been fully implemented, and it is an issue that becomes more complicated with the presidential vacancy after the end of former President Michel Aoun’s term, and the parliament’s inability to legislate and narrow borders. The powers of the caretaker government, in addition to the exacerbation of political differences and stakeholder conflicts over how to get out of the crisis.
In parallel, the year 2023 will witness the end of the mandate of the Governor of the Banque du Liban, Riad Salameh, in May, to end a reign that continued to be extended continuously for 33 years.
What are the most prominent economic and financial challenges that Lebanon will face in 2023?
Former Minister of Economy Raed Khoury Khoury believes that during 2023 the economic and financial challenges will complete themselves since the fall of 2019, and will worsen in the absence of the state’s vision and the depletion of what remains of the central reserve, which fell over 3 years from 33 billion dollars to less than 10 billion at the present time.
In turn, the economist Ali Noureddine refutes the challenges of the year with several benefits, most notably:
– How Lebanon will complete the terms of the agreement at the staff level with the International Monetary Fund, before moving to the final understanding, and if Lebanon does not fully implement the conditions (this) means that the agreement will not be completed this year.
The entitlement to exit from the presidential vacancy, because the caretaker government is unable to take fateful decisions such as restructuring the public debt, and Parliament is unable to legislate to implement the laws required by the IMF.
– The most important merit: the termination of Salameh’s mandate, and in light of the presidential vacuum, it will be difficult for the government to appoint a new governor for the central, in return for the refusal of political forces to assume the powers of the governorship by proxy, the first deputy in the central, Muhammad Baasiri, because it is a site designated for the Maronite sect, and because a vacancy in the governorship is not possible and has serious monetary repercussions, It may generate a political clash over how to agree on an alternative to Salameh.
– Entitlement to restructure the banking sector through the completion of two parliamentary laws: the emergency law to restructure the banking sector and the law to reorganize the financial sector, which must determine how to classify and deal with retained deposits.
How will the future of the lira be in 2023?
Khoury considers that the Central Bank does not have a magic wand to solve the lira crisis, and that the state’s failure to carry out radical reforms means its continued collapse without limit or ceiling against the dollar.
And he adds: “Nothing indicates that the lira will follow a different path, blaming the central bank for what it calls “arbitrary circulars”, wrong intervention in the black market, and the failure of an exchange platform to control the money market.
Khoury believed that the corrective path for the lira begins with reorganizing the financial sector and restructuring the public debt.
What are the challenges facing banks in 2023?
Khoury says that banks were historically the levers of the economy in Lebanon, and today they are complaining of a systematic beating of their existence and role. And he refuses to restructure the banks in the current proposed formula, “because it will lead to the write-off of deposits, while their recovery must be through the state.”
However, Noureddine finds that the challenge of banks is the crisis of accumulated losses in the sector, which the government estimated at about $73 billion, which is the difference in the consequences of the sector for depositors in hard currency and the liquid and liquid assets it possesses, and this gap is the crux of its crisis.
He says that dealing with it is through a comprehensive restructuring of the sector, by zeroing the losses, distributing them fairly, setting certain priorities for how to deal with deposits, and determining the fate of the funds that fled abroad after the fall of 2019. This assumes that “the most deserving categories of losses will begin to be loaded from the owners of illegal enrichment.” and tax evaders.