BEIRUT – Lebanon’s currency hit a new low on Tuesday as deep divisions within the newly elected parliament raised concerns that political paralysis could exacerbate one of the worst economic crises in history.
Of the 128 members of parliament, 13 were independents. They took part in protests against the Lebanese political elite responsible for decades of corruption and mismanagement.
It triggered a possible clash in parliament between the two camps, raising concerns about a protracted stalemate over the formation of a new cabinet that desperately needs to resume talks on a bailout program with the International Monetary Fund.
On Tuesday afternoon, the dollar was trading at ,000 34,000 on the black market, surpassing the 33 33,000 recorded in January. The Lebanese currency was pegged at 500 1,500 against the dollar for 22 years until the crisis began in October 2019.
Since then, more than 80% of the population has been plunged into poverty, with severe shortages of electricity, medicine and other necessities due to the drying up of central bank reserves. The crisis also triggered the biggest wave of emigration since the 1975-90 civil war.
On Friday, Lebanon’s outgoing government approved a recovery plan to help the Middle East emerge from the recession. The development took place at the last formal cabinet meeting before the caretaker government was formed after the election. The plan is a key demand of the IMF.
Outgoing Prime Minister Najib Mikati told reporters last week that the plan aims to protect small depositors and that plans to protect large depositors would be discussed with the IMF. He did not offer any figures but said in the past that depositors of 100,000 or less.
On Tuesday, the Lebanese Association of Banks blasted the government’s plan, saying it was going to pay depositors more than 70 70 billion in state funds.