Lebanon plans to adopt a “realistic exchange rate” for the local pound in the 2022 budget, according to a document published by the finance ministry on Wednesday that did not specify a rate.
The draft budget put the average exchange rate of the pound in the final quarter of 2021 at 20,000 Lebanese pounds to the dollar, and at 10,083 pounds for the whole of 2021.
The pound’s official exchange rate, still applied on government transactions including customs duties, is about 1,500 to the dollar. The rates mentioned in the ministry’s report on the budget are informal “street rates”, outside the banking system.
The total budget deficit in 2022 is forecast at about 2.3% of gross domestic product, compared with an actual deficit of 1.1% in 2021, according to the document.
Lebanon is battling since end 2019 one of the world’s worst national economic depressions, fuelled by massive, unsustainable debt accumulated following the 1975-1990 civil war, described by some economists as a nationally regulated Ponzi scheme.
The government will continue to suspend payment on its foreign currency bonds in 2022, according to the finance ministry document.