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By Layan Odeh

Lebanon’s Middle East Airlines and other carriers operating in the country will no longer accept payments in the local currency, the latest sign of collapsing confidence in the country’s decades-old peg to the dollar.

Starting on Monday, the airline 99% owned by the central bank will accept payments made by any credit card or bank check “provided that the operation is in foreign currency,” according to state-run National News Agency.

Lebanon is grappling with its worst economic and political crisis in decades, following months of protests that forced the previous government to resign. The pound, pegged to the dollar since 1997, is losing value on the black market as shortages of foreign exchange paralyze businesses and threaten to tip Lebanon into default.

Lebanon long relied on remittances from millions of citizens living abroad to finance its current-account deficit, prop up the banking system and bolster the pound’s peg. But with capital outflows on the rise, the central bank has been forced to ration dollars and local lenders have imposed limits on withdrawals and the movement of funds abroad.

Jamil El Sayyed, a parliament member, said on Twitter that the decision could be illegal. Lebanese law stipulates that any institution owned, financed or managed by the government, fully or in part, is obliged to accept the nation’s currency or the official dollar rate set by the central bank.

Under House arrest

Writing on Twitter, MP Fouad Makhzoumi said the move put the Lebanese under effective “house arrest” and must be canceled.

Lawsuit

The Free Patriotic Movement announced Sunday that it will file a lawsuit against Lebanon’s national carrier, after the company said customers can no longer pay for their tickets in Lebanese lira.

Outrage

MEA offices had so far continued to accept payments in pounds at the official rate , this is why Sunday’s announcement was met with an angry response on social media.

“MEA: A national airline that does not accept payment in its own national currency. Logic redefined,” one Twitter user wrote.

Another posted in response to the news: “Middle East (MEA) belongs to the Lebanese state, it’s a flagrant violation of the law. We’re not heading for collapse, we’re in the middle of it.” 

Update : Middle East Airlines has reportedly reversed its decision to sell tickets exclusively in foreign currencies, at the request of PM Hassan Diab.

BLOOMBERG/ REUTERS

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