Deputy Prime Minister of the Mikati-led caretaker cabinet, Saade Al-Shami, on Friday stressed the substantial need to adjust the customs US dollar rate away from sharp political contentions.

“There is an urgent need to adjust the US dollar exchange rate in order to restore order to public finances, cover public sector expenditures, secure basic services for citizens, and establish the much needed macroeconomic stability to stimulate growth, create job opportunities, and reduce poverty,” Saade said in a statement.

“Therefore, it is of paramount importance to approach this matter with utmost impartially and to limit discussions to this particular issue without trying to link it to other complex and deeper issues that need more procedures and time to be addressed,” the statement read.

Saade went on to regret that some sides overlooked the negative impact of an increase in wages, and other expenses, without ensuring appropriate sources of budget funding within the medium-term financial framework (2023-2026), warning from an accumulation of public debt if not funded properly.

“The policy of financing the budget deficit from the Central Bank via additional printing of LBP currency, as has been the case over several years, is no longer permissible or possible, according to the economic and financial reform program which seeks to avoid further inflation,” Saade explained in his statement.

“The fear of the grave impact of raising the customs US dollar rate on the prices of commodities is legitimate; however, and in my opinion, it is exaggerated. Most basic goods and services are exempt from customs duties and value-added tax, but there is no doubt that the rise in the prices of other goods and services may in turn affect all prices, even basic ones. This increase, no matter how much it is, remains relatively low in comparison to the wage hike intended to be adopted, which will lead to an improvement in the purchasing power of workers in the public sector. As for the private sector, it is more flexible and responsive to economic changes, as wages have been adjusted in a relatively acceptable manner,” Saade’s statement added

Source: National News Agency – Lebanon