Hyperinflation: PM Diab says gov should address ‘crazy rise’ in prices

File photo: Caretaker PM Hassan Diab

Prime Minister Hassan Diab finally addressed the hyper inflation issue in Lebanon on Tuesday and said during a cabinet session at the presidential palace in Baabda “the crazy rise in the prices of foodstuffs and commodities must be among the priorities” of the government.

PM Hassan Diab

He blamed the hyper inflation on the greed of the merchants

“Some merchants are greedy and they should not remain without accountability,” Diab said.

They are “taking advantage of the situation to achieve hefty profits at the expense of the livelihood of the Lebanese and there should be strict measures against them,” he added.

In Lebanon, the government has defaulted on its debt and warned that its large amount of public foreign debt has lowered foreign exchange reserves to critical levels. Public spending cuts were promised by  Diab, a technocrat who is supported by Hezbollah and allies — along with a sobering projection that over 50% of Lebanon’s population might sink below the poverty level.

This, coupled with the troubles caused by the COVID-19 pandemic and ensuing lockdown, has created a critical amount of hyperinflation. The Lebanese pound has sunk to new lows, reducing its value by over 60 % in a matter of weeks. Consumer goods prices have shot up over 100% for imported products . Savers have been locked out of their deposits since mid-October, when unrest first emerged.

LEBANESE CURRENCY- 100,000 LL was worth about $66 prior to the protests against corruption in Lebanon now it its worth less than $25 in the parallel market and has less purchasing power than $15 because of hyper inflation

Protests have been sparked in major cities across Lebanon as a result, with some protestors speaking of either “dying from the disease or dying from hunger”.

Prior to the Covid-19 outbreak, the World Bank projected that 45% of people in Lebanon would be below the poverty line in 2020. Now, the government believes that up to 75% of people are in need of aid, Social Affairs Minister Ramzi Musharrafieh told CNN. 

Tens of thousands of people have lost their jobs or seen salaries slashed in half because of the economic collapse and the lockdown.